You see them all the time on the stores on Wisconsin between Dumbarton and P: “Going Out of Business” signs. And yet the businesses that hang them don’t actually go out of business. It’s a tawdry tactic primarily intended to fool tourists into thinking that if they come in to the store they’ll get a great deal. But what people might not realize is that these signs are illegal.
Title 47, chapter 21 of the DC Code is abundantly clear on when and how “going out of business” sales can be run.
First it defines what it calls a “closing-out sale”:
“Closing-out sale” means and includes any sale in connection with which there is any representation by the person conducting such sale that the sale is being conducted, or is required or compelled to be conducted, for reasons of economic or business distress, inability to continue business at the same location, or the age or health of the owner or owners of the business, and the term “closing-out sale” shall include but not be limited to, all sales advertised, represented, or held forth under the designation of “going out of business,” “discontinuance of business,” “selling out,” “liquidation,” “lost our lease,” “must vacate,” “forced out,” “removal,” or any other designation of like meaning.
Then it lays down rules meant to guarantee that when you say you’re going out of business, you’re really going out of business. For one, you can’t stock up the store in anticipation of a closing sale:
No person in contemplation of a closing-out sale shall order any goods, wares, or merchandise for the purpose of selling and disposing of the same at such sale, and any unusual purchase and additions to the stock of such goods, wares, or merchandise within 60 days prior to the filing of application for a license to conduct such sale shall be presumptive evidence that such purchases and additions to stock were made in contemplation of such sale.
And once you’ve started a closing sale, you can’t stock any more goods:
No person carrying on or conducting a closing-out sale or a sale of goods, wares, or merchandise damaged by fire, smoke, water, or otherwise…shall, during the continuance of such sale, add any goods, wares, or merchandise to the stock inventoried in his original application for such license, and no goods, wares, or merchandise shall be sold at or during such sale, excepting the goods, wares, or merchandise described and inventoried in such original application.
And once you start a closing sale, you can’t keep it going indefinitely:
No person shall conduct a closing-out sale or a sale of goods, wares, or merchandise damaged by fire, smoke, water, or otherwise beyond the termination date specified for such sale.
Sometimes stores hold going out of business sales, then simply switch the name of the store, or move it, but both are still illegal:
nor shall any person, upon conclusion of such sale, continue that business which had been represented as closing out or going out of business under the same name, or under a different name, at the same location, or elsewhere in the District of Columbia where the inventory for such sale was filed; nor shall any person, upon conclusion of such sale, continue business contrary to the designation of such sale.
Sometimes they use signs that say GOING OUT for BUSINESS!! The law doesn’t have a provision strictly on-point to this tactic, but it could probably fall under general laws and regulations for false advertising.
Either way, the law is clear: If you say you’re going out of business, you have to really go out of business.