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Going out of business! Really, truly, seriously! "If Senate Bill 684 becomes law, stores would be required to buy a state permit to hold a going-out-of-business sale, which would be limited to 90 days."

Advertising - The state Senate votes to limit the "endless sales" at stores that don't shut down

The Oregonian May 12, 2007 by HARRY ESTEVE and DAVE HOGAN

You see them all over, splashed across store windows or waved by people paid to stand on street corners:

Signs that say, "Going out of business!" "Prices slashed!"

Then you see them again, a month later. And a few months after that.

But soon, you may see fewer of them. The Oregon Senate approved a bill Friday that would put strict limits on those going-out-of-business sales at stores that never truly shut their doors.

"There are endless sales that go on for months or years," said Sen. Rick Metsger, D-Welches, who spearheaded the bill, which he said 25 other states already have. He said the advertising amounts to deceptive pricing and the discounts undercut other merchants.

Metsger championed the bill after he was approached by Portland rug merchant David Atiyeh, who noticed a competitor was having a "going out of business" sale. No big deal. Except for the fact that the sale had been going on in one form or another for years.

Atiyeh, nephew of Oregon's former governor and owner of Atiyeh Brothers, said such sales undercut more legitimate dealers. "Oregon has been the dumping ground for this activity," because no law prevents it, Atiyeh said.

If Senate Bill 684 becomes law, stores would be required to buy a state permit to hold a going-out-of-business sale, which would be limited to 90 days. Beginning and end dates would be listed on the permit. Stores would be restricted to one such sale a year.

The bill, loosely modeled after a Washington state law, also would prohibit the practice of moving inventory from another store or warehouse to a store that supposedly is shutting down. Further, it defines a "sham" sale as a going-out-of-business event in which the intent of the owner is to remain open or to reopen at another location in the same area.

The bill has support from the state attorney general's office, which has received dozens of complaints over the years about misleading "going out of business" advertising. Rug and furniture stores dominate the list, although a handful of other types of businesses, such as home decor shops, are on there as well.

"Oregon consumers expect these sales to offer discounts far below those in normal sales and don't mind standing in long lines to pay for these so-called bargains before the store officially closes its doors for good," said Jan Margosian, who oversees consumer complaints for the state. "Because of the strength of the 'going out of business' and 'store closing' labels, many states specifically regulate these sales."

The bill passed 19-8, with most Republicans in the Senate voting against it. It now goes to the House. Senate Minority Leader Ted Ferrioli, R-John Day, called the bill "evil."

"To me, this sends a message to consumers that they are stupid," Ferrioli said.

But Sen. Margaret Carter, D-Portland, suggested many consumers get taken in by sham sales, and counted herself among them. She said she bought a bedroom set at a furniture store's "going out of business" sale, only to find the same set at a lower price at a different store. And the store where she bought the furniture didn't close.

"I was stupid; I was an idiot," she said, before voting for the bill.

Although lots of stores have closing sales that seem to last a long time, the rug industry is particularly susceptible, Atiyeh said. He had specific complaints about two businesses, Broadway Rug Gallery and Pacific Gallery, both in downtown Portland.

The concerns caught the attention of Metsger and of the state Justice Department, which wrote a letter of warning to the owner of Broadway Rug Gallery that its "going out of business" sale, which ran for months, had gone on a little too long.

"This type of sale can create a sense of urgency, with consumers understanding that special values will only be available for a limited period of time," wrote Susan LeTourneau, enforcement officer for the department's civil enforcement division. "When the advertising continues for a protracted period of time, and the store does not close, the public may then have reasons to question the truth of the price reductions claimed."

LeTourneau went on to note that although Oregon law does not prohibit such sales, they could run afoul of the Unlawful Trade Practices Act.

Moe Razipour, who owns Broadway Rug Gallery, said Friday he is being unfairly singled out. He said his going-out-of-business sale, which started in January, is legitimate. He said he closed his doors to the general public Monday, and now is running an auction to sell the hundreds of rugs that remain in his store.

"I assure you, once I am done with my auction," the store will close its doors, Razipour said. "Sometime in June, I believe."

Harry Esteve: 503-221-8226; harryesteve@news.oregonian.com