Going out of Business - Again!

Ottawa, August 23, 2006 - The Competition Bureau is warning consumers to beware of potentially misleading advertisements offering huge discounts as a result of bankruptcy, business closure, liquidation, renovation, clearance, retirement, moving and end of lease sales. These ads may contain claims such as: Public Notice; Auction; Bankruptcy Prices; Liquidation; Everything Must Go.

Careful examination may reveal that prices at bankruptcy sales or other types of closing sales are actually higher than regular prices elsewhere in the market. In some cases, unscrupulous companies may use vacant retail space to set up periodic bankruptcy/liquidation merchandise sales, inflate the regular prices and use phony markdowns. In others, the merchandise may actually be new stock purchased from existing suppliers, rather than inventory from a bankrupt distributor or retailer.

The Bureau has increasingly received complaints from consumers and competitors about a number of retailers, particularly some furniture, jewelry and houseware stores, that regularly close their doors due to renovations, bankruptcy or other reason, only to reopen under a different name with the same merchandise.

The Competition Act prohibits representations, in any form, that are false or misleading in a material respect. A true bankruptcy/liquidation sale should only offer merchandise that is affected by the bankruptcy/liquidation.

Consumer Tips to Prevent Being Scammed

• Shop around! You won’t really know if you are getting a deal until you find out what other retailers are offering.
• Ask questions! What was the price before the bankruptcy sale?
• Take your time! Don’t be pressured to buy quickly.
• Read all about it! Review the details carefully about the offer contained in any promotional material.
• Report it! If you suspect misleading advertising, contact the Competition Bureau.

Consumers who suspect they have been victims of misleading advertising or who want information on the application of the Competition Act should contact the Bureau’s Information Centre at 1-800-348-5358, or visit our Web site at www.competitionbureau.gc.ca.

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The Competition Bureau is an independent law enforcement agency. We contribute to the prosperity of Canadians by protecting and promoting competitive markets and enabling informed consumer choice.

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For media enquiries, please contact:
Pamela Wong
Communications Advisor
External Relations and Public Affairs Branch
819-953-7734

For general enquiries, please contact:
Information Centre
Competition Bureau
819-997-4282
1-800-348-5358