Liquidation sales can be risky business for customers


December 30, 2007|By DAN THANH DANG

Going-out-of-business sales can seem like a bonanza.

But before you pounce on tantalizing merchandise at post-holiday liquidation sales, realize that those marked-down goodies can come with some major limitations. Furthermore, realize that the decision to do business with a business that's not planning on being around for long is very risky business.

As Steve Hannan, executive director of the Maryland Consumer Rights Coalition, said of buying from insolvent companies, "You've got to be a gambling man to do that."

Leon Thompson never considered himself a gambling man, but take a chance he did this summer when he purchased an Apple iMac from CompUSA in Towson.

The 67-year-old retired human resources manager said he and his wife chose the Dallas-based electronics chain because "We wanted to buy from a very reputable company that's been around for a while."

Though that might have been true at one point, CompUSA announced in March that it was closing 126 stores throughout the country and liquidation sales would start immediately at the remaining 103 stores. But Thompson didn't hear about their planned demise until earlier this month, when restructuring firm Gordon Brothers Group LLC said that stores that aren't sold would be closed early next year.

The implosion going on at CompUSA might have factored into why Thompson received little to no help in August after he paid CompUSA to transfer files from an old computer to his new iMac.

"We couldn't find the files," Thompson said. "We couldn't tell if they actually transferred the files or if it never happened. We just wanted help with instructions on how to find our files and use the Apple computer. When we first purchased it, they said they would help us with any problems we had."

Thompson said CompUSA scheduled technician appointments with him only to cancel them or not show up at all.

Frustrated, Thompson demanded his money back for the computer. But CompUSA in Towson, where he purchased the item, denied his request in an Oct. 12 letter and blamed Thompson for failing to keep appointments.

As the clock winds down on CompUSA's liquidation, Thompson's chances of resolution grow slimmer by the day.

CompUSA did not respond to messages left on voicemail.

"There's really no value on a lesson or time with a technician so there's no recourse for him," Hannan said. "But even if you have some other legitimate dispute with the company that's not resolved in time, you're out of luck. Under capitalism, you can still go out of business and have everything finished. It's done. You, the consumer, have no recourse."

Consumer Reports warns that going out of business "is itself a big business."

Stores hire liquidation experts to manage every aspect of a sale, including setting prices, running ads and bringing in and training salespeople. What shoppers don't realize is that they could end up with overpriced and substandard merchandise. Some shady liquidators augment existing stock with inferior merchandise or leftovers from previous liquidation sales, Consumer Reports says.

Whether you're dealing with legitimate liquidators or unsavory ones, in almost all cases all sales are final.

If you take the item home and it doesn't work, too bad. If you buy it and decide you don't want it, too bad. If you arrange to have it delivered and it doesn't show up, too bad (unless you paid with a credit card).

It could be a bitter pill to swallow for unsuspecting consumers who think they've discovered a great find.

Perhaps that's why the Better Business Bureau of Greater Maryland recently reminded consumers that CompUSA won't honor refunds, rebates or exchanges on any merchandise sold after Dec. 12.

Return policies will still apply to purchases made before Dec. 12, but forget trying to exchange or return anything once CompUSA is gone for good. Visit the store immediately if you have unresolved business issues with CompUSA, the BBB advised.

If you find liquidation sales too hard to resist, do yourself a favor and take some extra steps to protect yourself when making a purchase.

Don't take the store at its word on sale prices. In other words, don't assume it's a steal. The Better Business Bureau and Consumer Reports say it would be wise to compare prices and quality of what you find with other stores to make sure you're really getting a deal.

Check for complaints against the liquidator. Search online, the BBB and the state attorney general's office to make sure you're not getting scammed by a liquidator passing off old and sub-par goods as new products.

Ask for and read warranties. Make sure there is a warrantor or other service facility nearby that will fix a problem if one arises later, Hannan says. Find out if you have to ship the product back to the manufacturer or warranty company yourself. If the answer is there's no one nearby to help, you might want to pass on purchasing something pricey that will be impossible to repair.

If an extended warranty was purchased through the soon-to-be-gone retailer, Hannan says you might be out of luck unless a third party was designated to take over warranty service.

Pay for merchandise with a credit card. Should things go wrong, you'll have a better chance of getting a refund than if you paid with cash, check or debit card.

As for Thompson, he's given up on resolving his problem through CompUSA. He's going to check to see if Apple can help answer his computer questions and he's holding out hope that his credit card company will honor his claim for services never received.

Reach Consuming Interests by e-mail at consuminginterests@baltsun .com or by phone at 410-332-6151. Consuming Interests now is also a blog, at

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