`Going Out Of Business Sale': Are They Really Closing Their Doors?

When you read an advertisement for a "going out of business sale," do you expect exceptionally good bargains?

Most consumers do. Going-out-of-business ads promote customer traffic in the showroom. That's why they're appealing to businesses. But consumers who see such ads month after month wonder if, indeed, the merchant is going out of business, or simply generating traffic.

Until about a decade ago Seattle had an ordinance that required a special license and limited the length of time for such sales. King County, Everett and Tacoma still have regulations for these special sales.

The Seattle ordinance apparently was dropped because it was thought city and state statutes on false and misleading advertising were sufficient enforcement tools.

A recent investigation by the Seattle Department of Licensing and Consumer Affairs and the state attorney general's office may have changed the viewpoint of those who keep watch on the marketplace for consumers.

Since last October, Shirazi Rugs International has advertised going-out-of-business sales numerous times each month in The Seattle Times and Seattle Post-Intelligencer.

That seems a bit misleading to us especially in view of a licensing registration form filed with the city, which makes the details of ownership a bit confusing.

Last Sept. 30, Shirazi & Co., doing business as Shirazi Rugs International at 801 First Ave., asked the city to cancel its business license, according to city records. The company had been in business since July 1988.

But in a business license application filed Jan. 31, 1991, with the city, Gallery of Imports & Exports and Ghassemi & Ghassempour, doing business as Shirazi Rugs International, said the business began on Oct. 26, 1990.

That also is the date going-out-of-business sale advertisements began to appear in both The Times and the Post-Intelligencer.

It seems strange to us to begin a business and start out-of-business sales on the same day.

The company's most recent advertisement, which appeared Tuesday

in the Post-Intelligencer, read: "We won't meet, we'll beat all prices." The ad also promised, "73 percent off on every rug in stock." Consumer advocates note that the ad didn't state what the rugs' original prices were, so it is difficult to know the meaning of "73 percent off."

Abel H. Ghassemi, a partner in Gallery of Imports & Exports and Ghassemi & Ghassempour, says his company has a contract with Shirazi Rugs International, and he is managing the sale.

Ghassemi said the business name was changed and a new business license filed last October because his bank told him that was necessary.

"We came from New York with several thousand rugs," Ghassemi said, adding that he wanted to handle the money from the sale.

He was advised by his bank that to protect his interests he should have a business registration, Ghassemi said.

Amir Shirazi-Shad, president of Shirazi Rugs International, said that was his understanding, too. In addition, the state will not allow a single company to have two tax identification numbers, Shirazi said.

Both men believe the city and state investigations were brought on by complaints from competitors, not consumers.

The Better Business Bureau reports four complaints from consumers about some aspect of the sales. The bureau does not make specific consumers' complaints or names public.

City and state representatives acknowledge that other rug merchants have complained about what seems to be a never-ending going-out-of-business sale.

Ghassemi and Shirazi-Shad say the companies' last day of business will be May 12.

They believe they have done nothing wrong, because neither Seattle nor Washington state have statutes regulating these sales.

A spokesman for the Seattle licensing department said the city is considering readopting regulations on such sales, because of the recent investigation.

Asked if he will open a rug business locally again, Shirazi-Shad said it is possible.

The Seattle Times and the Seattle Post-Intelligencer do not have a policy governing going-out-of-business sales because there are no city or state ordinances, said Chuck Nau, local display advertising manager. However, if a business continually runs an ad that says, "Final three days," it will be asked to change its ad, Nau said.

In an April 6 ad in the Post- Intelligencer, the rug companies stated:

"As directed by the Office of the Attorney General of the state of Wash., final weeks are approaching - Going Out of Business."

The attorney general takes a dim view of businesses that give the public the impression the state has approved or condoned their advertising, said Janet Reis, an assistant attorney general.

Reis said the state is continuing its negotiations with the rug companies.

Shelby Gilje's Troubleshooter column appears Tuesday, Thursday and Sunday in the Scene section of The Times. Do you have a problem? Write to Times Troubleshooter, P.O. Box 70, Seattle, WA 98111. Include copies, not originals, of documents indicating payment, guarantees, contracts and other relevant materials.