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Going Out of Business / Distress Sales

If a seller advertises a sale using claims such as “going-out-of-business,” “final liquidation,” or “everything-must-go,” those claims must be accurate.

What is a Distress Sale?

Under the Distress Sale Rule (Ohio Administrative Code (OAC) Section 109:4-3-17), a “distress sale” is any sale that would lead a consumer to believe the seller has or is:

  • Going out of business;
  • Discontinuing all or any portion of its business;
  • Lost or is terminating its lease;
  • Liquidating its assets (“final liquidation,” “everything-must-go”);
  • Suffered a disaster (fire, smoke or water);
  • In bankruptcy or receivership; or
  • Holding the sale based on its financial condition.

If none of those conditions apply, a seller may not advertise a sale as a distress sale.

Distress sales do not include the sale of special purchase items, clearance items, or seasonal items. Additionally, the Distress Sale Rule does not apply to licensed auctioneers, sheriffs, or other public officials selling goods in the course of their official duties. However, sellers in receivership, bankruptcy, or any liquidator acting on their behalf are subject to and must comply with Ohio’s Distress Sale Rule unless enforcement would conflict and be preempted by federal law.

Time Limits for Holding a Distress Sale

Under the Distress Sale Rule, sellers may not advertise or conduct a distress sale for more than 45 days, but they may extend the sale for an additional 45-day period by clearly and conspicuously disclosing the extension in any advertisement or other representation regarding the sale.

Additional Restrictions

The Distress Sale Rule also sets forth the following restrictions:

  • No substituting goods: A seller may not substitute or supplement its goods with goods from another outlet unless: (1) those goods were ordered before announcing or advertising the distress sale; (2) the goods were ordered in compliance with Ohio’s Bait Advertising Rule (OAC 109:4-3-03); or (3) the goods were owned prior to the bankruptcy or receivership and the goods were transferred pursuant to court order and all advertisements clearly and conspicuously note the goods were added to the distress sale.
  • No misrepresentation: A seller may not misrepresent the former price, savings, quality, or ownership of any goods to be sold. The seller may not indicate a sale is a liquidation or similar type of sale unless the seller is liquidating all assets for final distribution. It also may not misrepresent who is holding the distress sale.
  • No reopening: A seller may not advertise or hold a going-out-of-business sale and then reopen, or resume the same business under the same or any new name if the ownership and/or control of the business remain the same, within 12 months after the distress sale.

Sellers that hold distress sales also must physically separate or otherwise identify distress sale items from regular stock items in the store.

Advertising Requirements

When advertising a distress sale, a seller must:

  • Include the start and end dates of the sale.
  • Disclose the intention to close and relocate after the distress sale, if that is the case.
  • Distinguish distress sale items from regular stock items, if not all items are part of the distress sale.

Some cities and municipalities may have additional requirements for advertising and conducting distress sales. Sellers should check with the appropriate entities.