N.Y. AG puts end to ongoing going-out-of-business sale

Bryan Cohen Apr. 8, 2011, 2:48pm


SYRACUSE, N.Y. (Legal Newsline) -- New York Attorney General Eric Schneiderman announced a settlement on Friday with a Syracuse-based oriental rug and liquidation companies for alleged deceptive and misleading advertising.

Jacobson Oriental Rugs and Overstock Liquidation allegedly held an extended "going out of business sale" that went on much longer than the 30 days with a 30-day extension allowed by New York law. The companies have agreed to pay $65,000 in civil penalties and to end the sale.

"This should serve as a warning to businesses out there who attempt to deceive and manipulate the public," Schneiderman said. "On behalf of consumers, we are watching you and will use all of our enforcement power to penalize dishonest practices."

Jacobson Oriental Rugs obtained a license from the city of Syracuse in October 2010 to conduct a 30 day going-out-of-business sale and then later renewed the license for an additional 30 days. The company then allegedly partnered with Overstock Liquidation Company LLC to continue the sale at its showroom in Syracuse. Under Overstock's direction, the going-out-of-business sale allegedly continued through mid-March even though the license had been exceeded.

Jacobson advertised a percentage savings off of its already reduced prices during all sale periods and Overstock promoted a liquidation of Jacobson's inventory with a purported savings of more than 50 percent off of a rug's value. Allegedly, the sale was effectively a continuation of the going-out-of-business sale.

In addition, Schneiderman alleged that the promotion of a "liquidation sale" that was not court-ordered or a forced liquidation of assets was deceptive. He also alleged that since the prices for oriental rugs are not set in stone and it is routine for consumers to negotiate a price, Jacobsen's advertising of as much as 50 percent off was misleading.

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