It’s No Joke.
Every day, dozens of people are virtually ‘robbed blind’ at fraudulent Going-Out-of-Business Sales (GOBS) and Auctions that offer wildly inflated discounts off of equally inflated prices. And when they go back to try to return the rugs, the operator refuses to accept them or has left town to run a ‘going out of business sale’ in the next county under a different name.
The truth, in many cases, is that the sale is being run by professional oriental rug ‘liquidators’ – not the original store owner.
Laws concerning these sales vary from state to state, but are generally hard to enforce, costly to litigate and carry very light sentences for offenders.
We’ve prepared this pamphlet to help you avoid the pitfalls of buying a rug at a fraudulent going-out-of-business sale, liquidation sale or itinerant auction.
How Do Fraudulent “Going-Out-of-Business” Sales, “Liquidation” Sales and Itinerant Auctions Operate?
At a Going-Out-of-Business Auction, Mr. A. purchased a rug for $2,000 that he was told was worth $10,000. It was later appraised at $500.
– These sales are very profitable for the operator. They often succeed by intentionally and deliberately deceiving you, the consumer, with gross exaggeration about the real value and integrity (origin, quality of materials, weave, age and condition) of the rugs they sell.
At an Oriental Rug Going-Out-of-Business Sale, Mrs. G. was sold an 8’x10′ “fine, pure silk” oriental rug for $3,200. She was told it had a retail price of $8,000. She later took it to an independent appraiser and was told that it was rayon with an actual retail value of less than $2,000.
– Before beginning the “sale”, a dishonest operator might tag the rugs with prices that are hundreds (or even a thousands) percent more that their regular retail prices. For example, a rug that would normally sell for $2,000 is re-tagged for $8,000. The operator then advertises enormous discounts – typically 60% or more. He’s claiming the rug to be worth $8,000 but is offering it to you, the unwitting consumer, for $3,200, $1,200 MORE THAN YOU SHOULD ACTUALLY PAY FOR THE RUG.
A career diplomat, who had lived for many years in the Middle East and had some knowledge of oriental rugs, purchased at a Liquidation Sale what he was told was an authentic Persian Tabriz oriental. A certified appraiser identified it as a reproduction, made in China.
– Often, an outside operator will run the ‘sale’. Don’t be fooled if a sale takes place at a long established location. Although illegal in many states, the operator often will bring in large quantities of rugs, very few of which are the quality for which the established company was known.
At a Liquidation Sale, Mr. and Mrs. Y. spent $18,000 for three Persian rugs that they were told carried an original retail price of $49,500. The rugs were later valued by an independent appraiser at $7,850.
– Their ads will frequently include vague and purposely misleading references to government agencies. Sales and auctions, particularly those staged at airports, often headline their ads with phrases such as “PUBLIC NOTICE – IRS GOODS”, “PUBLIC NOTICE – GOVERNMENT SEIZURE” or “GOVERNMENT BONDED WAREHOUSE”. This ploy is simply designed to give the illusion of legitimacy and legal status. The fact is that the Federal Government holds regional sales/auctions once or twice a year – not every Sunday.
A couple purchased a rug for several thousand dollars at a liquidation sale. A month later the fringe started to fall off. Despite the ‘full refund policy’ promised at the time of purchase, they were offered only a token amount for repairs – far less than the repairs cost. The couple is now involved in a costly lawsuit to try to recoup their losses.
– Or they’ll headline their ads with other, quasi-legal jargon. Although sometimes legitimate, the vast majority of advertisements using these slogans are an attempt by unscrupulous operators to lure you in. Typical headlines include:
- Closing Out
- Quitting Business
- Discontinuance of Business
- Selling Out
- Branch Store Discontinuance
- We Give Up Sale
- We Quit Sale
- Bankrupt Stock
- Must Vacate/Forced Out
- Final Days/Last Days
- Lease Expires/Lost Our Lease
- Benefit of Creditors Sale
- Warehouse Removal Sale
- Adjusters/Assignees Sale
- Reorganization Sale
- Benefit of Administrators Sale
- Custom Ordered Liquidation
- Executor’s Sale
- Building Coming Down
- Benefit of Creditor’s Sale
- Insolvent Sale
- Mortgage Sale
- Bankruptcy Sale
- Receivers/Trustee Sale
- End/Last Days
- Beware of high pressure sales pitches. Stores that advertise that they’re closing their doors tomorrow are often still open the next month. And when the salesperson tells you that the price is only good for today – be assured that he’ll still be willing to sell it at the same price tomorrow or next week.
- Don’t equate legitimacy with big dollar advertising. Make your purchase at a store with a solid reputation.
- Keep in mind, that any guarantee is only as good as the store that offers it. A “Lifetime Guarantee” from a store that’s going out of business is worthless.
- If you have any question about the value of a rug you are considering purchasing, have an independent, certified appraiser evaluate it. If you need the name of a certified appraiser, contact your homeowners insurance agent or the Oriental Rug Retailers Association (703-777-6565).
- And if you have already purchased a rug at a Going-Out-of-Business Sale and have a problem, we suggest you contact your local attorney general for advice and assistance.