BBB Tip: Avoid bogus bargains at going out of business sales

Unfortunately, the economy and other factors can drive retailers out of business. When brightly colored and prominent ads shout “Going Out of Business Sale,” “Total Liquidation,” or “Everything Must Go!” you might think you are about to get the deal of a lifetime. But you should shop cautiously for several reasons – even when merchandise is deeply discounted. 

BBB Scam Tracker often receives reports about online "going-out-of-business" sales that either don't actually exist or don't live up to the hype, resulting in a loss of money and scammers stealing your personal information.

How this scam works

You're shopping online or scrolling through social media and come across an advertisement for a large retailer's "going-out-of-business" sale. The advertisement and website may look like the real deal, and the prices of products may be incredibly reduced. Tempted to take advantage of the sale, you decide to add items to your cart and make your purchase. You receive your tracking number in an email and await your package! However, after several days or weeks, you never receive your order. You try to reach out to the company to get a refund, but they tell you that your order is not in their system and that you were likely scammed by a fake website or advertisement.

One consumer shared their experience on BBB Scam Tracker, "I saw the Advertisement for [company name redacted] on Facebook. Since the store is going out of business, I believed the Ad that stated it was a store closing. The website looked EXACTLY like the [company name redacted] website that I have used many times over the past several years. I placed my order, they even gave me a Tracking Number which I followed right up to the day they stated my order had been delivered. I was home and did not receive any deliveries...I contacted [company name redacted] gave them the order number and the tracking number, only to be informed that the numbers did not belong to them."

Frustrated shoppers have also reported to BBB Scam Tracker that the products they receive from online "going-out-of-business" sales are much worse quality than what was shown online. For example, one consumer shared they saw an advertisement for a "going-out-of-business" sale from a small leather goods company. When the consumer received their order, the product was not what was advertised. "In reality, the products are made in China and are 100% plastic and there are no refunds unless you ship the item back to China at great cost."

Other times, scammers never intend to send you anything at all. They steal your credit card information when you are prompted to pay. These phony sites can also download malware onto your computer and give scammers access to your personal information, passwords, and more. 

How to avoid similar scams

• Always check a company’s reputation on BBB.org before doing business with them. Look beyond the letter grade rating to read the customer reviews and details of complaints to get an idea of what past customers have experienced. You may decide the great prices they advertise may not be worth the potential problems that could arise. Be wary of purchasing items from online retailers you are unfamiliar with.
  
  
• According to the BBB Code of Advertising, liquidation and going out of business sales are considered “emergency” or “distress” sales. Businesses may only advertise this kind of sale if they are actually going out of business. In addition, they have a limited time period to offer such deals. BBB’s code states, “If such sales exceed ninety (90) days, advertisers must be prepared to substantiate that the offering is indeed a valid emergency or distress sale.” If you notice a business in your area advertising a “going out of business” or “liquidation” sale for months without ever closing, be wary. It could be a shady sales practice. Some businesses use these terms dishonestly to draw in customers and pressure them to buy, often by implying limited access to certain merchandise or a small window of time to purchase.
  
  
• Know where you shop. Even if you think you are on the website of a reputable company, double-check the web address before you purchase to be sure scammers haven’t redirected you to an imitation site. Look for blurry images and logos, too. These are red flags for fake websites.
  
  
• Look for a secure connection and a privacy policy. Before you enter your personal information on any website, check for a secure connection. To do this, ensure the URL begins with “https://” and includes a lock icon on the purchase page. HTTPS ensures that users' internet experience is secure as they use their computers to browse the web. The lack of a privacy policy is also a red flag.
  
  
• Use your credit card. Paying with a credit card gives you the advantage of being able to dispute fraudulent charges. This is the safest payment method for purchasing items online. Be warned, however, that your credit card company may not keep this up indefinitely. If you routinely shop at shady websites, they may refuse to return your money. Be skeptical of the website if it asks you to pay with a digital wallet app or another uncommon payment method.
  
  
• Even in legitimate going-out-of-business sales, some businesses hire third-party liquidators to help them get the most money possible from their remaining merchandise. After all, the business owner is still responsible for paying off any outstanding bills they owe, even after their business closes. Third-party liquidators often mark merchandise up first and then offer a small discount in the first week or two of the sale. This offers a better return to the business owner, but consumers may unwittingly end up paying more than the original price of the product, even though the seller claims it is discounted. To avoid falling into this trap, shop around. Compare prices at other stores to ensure the “discounted” item you plan to purchase is cheaper than the normal price.

Think about returns and warranties

If you have not received goods or services you have already paid for, all may not be lost. BBB has these tips to help you toward resolution:

• Collect receipts, proofs of purchase, and other documents such as warranties and manuals. These materials will help you prepare for your request for a resolution.
  
  
• Check with the bank or credit card you used to make the purchase(s) at the now-closed company. You may be able to dispute the transaction(s) due to failure to receive goods or services. Credit cards offer more consumer protections on purchases than debit cards, so it’s generally better to shop with a credit card, particularly for big-ticket items.
  
  
• Try to contact the company to complete the transaction or resolve the issue. Some closed companies will offer an email, website, or phone number to contact for more information. Check with your BBB to see if they have information about the company, or search for the company on BBB.org. If the business has a physical address, check for a notice posted with information on where to turn for help. Also, look at the company's website and social media presence for information.
  
  
• If the company has not filed for bankruptcy, the business is still obligated to fulfill your order for goods, services, or a refund. Closing a business doesn't relieve the owner of that responsibility. While it can be time-consuming and expensive, a consumer may take the company to court. 
  
  
• For returns: if you have a warranty for an item you bought at the store, look into whether the manufacturer or the store issued the warranty. If the manufacturer issues the warranty, it will most likely honor it. When a company goes out of business, its warranties and services often die unless other agreements have been made.
  
  
• If you have unused gift cards for a closed business, bankruptcy filings will likely determine if and how they can be used or claimed.

Use up gift cards and pay with a credit card

Gift cards might seem like the perfect present for a hard-to-shop-for friend or family member, but they are not without drawbacks. When a store goes out of business, gift cards do, too. With the announcement of Bed Bath and Beyond’s bankruptcy and David's Bridal, this issue is back on shoppers’ minds. The Federal Trade Commission's decision in 2010 declared that gift cards couldn't expire for at least five years. These regulations differ by province in Canada. However, the situation changes when a business declares bankruptcy. If you miss the deadline to redeem a gift card, you can file a claim for the card's value. However, these claims are processed behind the company’s major creditors. So if you see news about a company preparing to file for bankruptcy, use your gift cards immediately.

See more: Don't get scammed out of a gift card

Avoid issues with your gift cards by following these tips:

• Before buying a gift card, look into the retailer’s financial condition: If news articles report that a company is on shaky ground, purchasing a gift card from another retailer might be best.
  
  
• Check the terms and conditions. A gift card’s terms may allow the card to be used at another business location.
  
  
• Purchase gift cards with a credit card, if possible: Your credit card company may be able to help recover money lost if a business goes under. Some retailers, however, require gift cards to be purchased with cash.
  
  
• Use gift cards as quickly as possible: While you may have years – or forever – to use the gift card, that doesn’t mean you should wait that long to spend it.

Don’t make impulsive decisions

Going out-of-business sales aims to get merchandise out the door fast. Advertisers use a sense of urgency and scarcity to pressure consumers into buying things they may not need simply because the price is too good to pass up.

• Use good judgment. When shopping for "going-out-of-business" sales, don't be too hasty. Ensure that the deals are real before making a purchase.
  
  
• Check to make sure the business and products are legit. Ensure you are getting a good deal on a product that isn’t defective.
  
  
• Be cautious. Going out of business sales can be a great way to save money on products you need, but always proceed with caution.

By following these tips, you can take advantage of sales wisely and avoid making a purchase you might later regret.

For more information

To protect yourself from scammers when shopping online, visit BBB's Online Shopping HQ.

Visit BBB's consumer HQ for more consumer tips and information.

If you’ve been the victim of an online shopping scam, warn other consumers by reporting the incident to BBB Scam Tracker.

Sign up for BBB Scam Alerts

Always look for businesses that follow BBB Accreditation Standards and BBB Standards for Trust.  

BBB Serving North Central Texas, BBB Serving New Mexico and Southwest Colorado, and BBB Serving Western Pennsylvania contributed to this article.