You've seen the signs plastered on store windows, often in strip malls. They shout out claims such as:
- Bankruptcy Prices
- Everything Must Go
- Liquidation
- Public Notice
Shoppers look for bargains at a liquidation sale at the Eaton's store in Sainte-Foy Que., Aug. 25, 1999. (Jacques Boissinot/Canadian Press)
So you think you're in for some good deals. Well, it's not necessarily so. The Competition Bureau of Canada has issued several warnings about misleading advertisements that offer big discounts from bankruptcy, business closures, asset liquidation, and moving- and end-of-lease sales.
The most recent warning – on Aug. 23, 2006 – said the number of complaints from consumers and competitors about several retailers has steadily risen. The bureau says these "phoney sales" are not seasonally driven, and that they don't necessarily coincide with back-to-school or Christmas shopping periods. And they are different than legitimate closeout sales like when the national department store chain Eaton's went under in the late 1990s and earlier this decade.
Most complaints tend to involve furniture, jewellery and houseware outlets that regularly shut down for "renovations" or "bankruptcy" only to reopen under a different name – with the same merchandise.
The Competition Bureau says some companies turn vacant retail space into "phoney" sales locations, which they stock with merchandise that is actually priced higher than regular prices in other stores. Signs may contain phoney markdowns – and the shelves may actually be filled with new stock bought from existing suppliers rather than from bankrupt businesses.
The bureau says with a little research, most people should be able to avoid confusion.
- Find out what other retailers are selling similar products for.
- Ask the retailer the price of the product before the "bankruptcy sale."
- If you're being pressured to buy, walk away.
- Read flyers, signs and other promotional material carefully.
- If you suspect misleading advertising, contact the Competition Bureau.
The Competition Act forbids advertisers from making misleading claims – like bankruptcy sale prices when prices have not actually been slashed.
"If the information is true then the business can knock themselves out," Brendan Ross of the Competition Bureau said.
Ross, strategic policy adviser for misleading advertising and labelling at the bureau, adds that if the advertised information isn't true, penalties can be severe – fines of up to $100,000. And if there's evidence of criminal intent, he says, there could also be jail time. The best defence, he says, is an informed consumer.
"Ask a lot of questions," Ross advises. "Find out what is the situation giving rise to this particular sale." Above all, he says, resist the pressure to buy.
- RELATED STORY: Grafton-Fraser to pay $1.2M in misleading ads case
- EXTERNAL LINKS: Competition Bureau
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