Better Business Bureau Serving North Central Texas warns consumers to beware deceptive “going out of business” sales.
In March 2017, BBB|NCTX began observing print ads in the Dallas Morning News for Rejebian and Son Oriental Rugs, located in Farmers Branch, Texas. The business advertises that it is “going out of business” and “closing after 83 years.” Rejebian and Son Oriental Rugs currently has an “F” rating with BBB Serving North Central Texas for failure to substantiate its advertised claims. As of April 13, 2018, over one year from the onset of BBB’s investigation, the business continues to advertise that it is “going out of business.”
As of April 19, 2018, Rejebian and Son has been claiming that it is “going out of business” for at least 404 days – far longer than any business should advertise without truly closing operations.
A good sale is certainly alluring. Consumers are generally apt to believe that prices are deeply discounted when emergency or distress sales are advertised. With that in mind, what are consumers truly getting, or in this case saving, when a company advertises a “going out of business” sale, but never goes out of business? According to the BBB Code of Advertising, “If [emergency or distress] sales exceed ninety (90) days, advertisers must be prepared to substantiate that the offering is indeed a valid emergency or distress sale.” The Federal Trade Commission writes that, “Liquidators may base discounts on the manufacturer’s suggested retail price, which often is higher than what stores typically charge. That means goods can end up costing more than they did before the going-out-of-business sale began.”
BBB monitored Rejebian and Son Oriental Rugs for a period of four months to see if the ads would cease. Additionally, two BBB advertising review staff members visited the business’s storefront location to verify that the business was still operating. BBB staff inquired about how long the company’s sale would last. A representative of Rejebian and Son informed BBB that the owner was retired, he was in negotiations with dealers, and that the sale could continue for an undetermined amount of time.
BBB|NCTX requested Rejebian and Son substantiate that it was, in fact, planning to go out of business as advertised.
Pursuant to chapter 17 of the Texas Business and Commerce Code (section 17.82), a person may not conduct a sale advertised with the phrase “going out of business,” “closing out,” or “shutting doors forever,” unless the business is closing all of its operations in a county and the immediately adjacent counties. The State of Texas also requires that a permit be issued to establishments that plan to go out of business. That permit is valid for 120 days after the date of issue and is not renewable. During the course of its investigation BBB requested that the Rejebian and Son provide a copy of the necessary permit.
While Rejebian and Son responded to BBB’s request for substantiation, as of September 11, 2017, the business did not provide adequate substantiation to prove its advertised claims. As such, Rejebian and Son Oriental Rugs has an “F” BBB Rating for failure to substantiate, modify, or discontinue its continuous “Going out of Business” claims. BBB|NCTX has formally referred its concerns to the Office of the Texas Attorney General and the Texas Secretary of State.
ABOUT BBB:For more than 97 years, Better Business Bureau Serving North Central Texas has been helping people find businesses and brands they can trust. In 2016, people turned to BBB|NCTX millions of times for BBB Business Reviews on North Texas businesses, information about advertising and trade practice investigations, to request a quote for service, dispute resolution services and more.