“Going out of business” sales: Are the deals real?

Who doesn’t like to save money? Those big colorful “going out of business” sale signs can draw you in, like a moth to a flame. Before you fork over any cash, make sure you understand the real deal. Otherwise, you might get burned.

Here are a few things to think about.

How can you tell if you’re getting a good deal?

Comparison shopping is your best bet. Check to see if the same, or similar, products are sold elsewhere for less. If you’re at the store, use your smart phone to compare prices online.

Timing can make a big difference. The longer the sale lasts, the deeper the discounts. The trade-off: there will be less merchandise to choose from.

Who’s handling the sale? The store owner or a liquidator?

Most of the time, the store owner or company is not in charge of running a going-out-of-business sale. Instead, they sell off their merchandise to third party liquidators, who hold the sale.

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.

Liquidation firms generally don’t honor gift certificates, coupons or store credits. Chances are they also have a “no refunds or returns” policy, so inspect merchandise carefully before buying. Make sure the instructions and warranty cards are included, especially if you’re buying appliances and electronics.

When can a company advertise a “going out of business sale”?

The short answer is: only when a store is going out of business. It’s against the law to advertise a “going out of business sale” when a store is not going out of business. If a store in your area is advertising what looks to be a bogus “going out of business sale,” contact your state Attorney General’s office.

Some states limit how long a seller can advertise it’s going out of business. For example, sales might be limited to 30 days unless the seller applies for, and is granted, an extension. That helps protect customers from being duped by never-ending “going out of business” sales.