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Post date: September 14 2006

Unlicensed Store Closing Sales Sanctioned

Attorney General Spitzer today announced a series of settlements with companies that failed to obtain licenses for "going-out-of-business" sales.

Hilco Trading Company, which managed the going-out-of-business sales for Media Play and Chase Pitkin, has agreed to pay $200,000 in civil penalties and costs, and make refunds to certain consumers.

"Going out of business sales are regulated by state law to protect the public from misrepresentation and fraud," Spitzer said. "These settlements send a message to merchants that my office is working with municipalities to ensure that this consumer protection law is complied with fully."

Hilco contracted late last year with Chase Pitkin to administer 13 store closing sales in the Rochester and Syracuse areas and with Media Play to administer 11 store closing sales in the Buffalo, Rochester, Poughkeepsie and Syracuse areas. Within days of the sales’ commencement, Spitzer’s office issued notices of violation when an initial review revealed that, in most instances, the proper licenses had not been obtained from the local clerk’s office.

State law requires:

  • The merchant to obtain a license from the local clerk’s office at least 15 days prior to a going out of business sale and provide a complete inventory of the goods to be offered for sale;
  • A copy of the license and inventory to be conspicuously posted in the stores; and
  • Any advertisements or announcements to conspicuously show the license number and the date of its expiration.

Spitzer’s office also cited Hilco for false advertising in relation to its Media Play sales. Spitzer’s investigation revealed that Hilco’s ads boldly promoted all items as "20 - 40% off" when, in fact, certain items such as video games, electronics and musical instruments were only 10 percent off. Likewise, its ads claimed that all items were on sale even though books were excluded from the sale.

Consumers who were misled by these ads and did not get the advertised discount may be eligible for a refund. For more information, consumers should contact the Attorney General’s Rochester Regional Office at 585-546-7430.

In separate matters, the Attorney General’s office has cited a number of other merchants for engaging in going out of business sales without a license. They are: Scott's Hallmark Shop of at Lac De Ville Plaza in Rochester, which paid $1,000 in civil penalties; Heritage Jewelers in Eastview Mall in Victor, which paid $1,000 in penalties and costs; Kirk’s Lock, Stock and Barrel Gifts, Inc. in Eastview Mall in Victor, which paid $1,000 in penalties and costs; Syms Corporation of Henrietta, which paid $6,500 in civil penalties; and Squire's Big & Tall, Inc. of Greece, which paid $500 in civil penalties.

The investigations were handled by Assistant Attorneys General Carlos Rodriguez and Denis Charlesworth of the Attorney General’s Rochester Regional Office and were supervised by Assistant Attorney General In Charge Bobby Colon.