Business bankruptcy can leave customers hurting

Consumer: My fiancé and I paid $2,500 to reserve a venue for our upcoming wedding. Weeks before we’re scheduled to exchange vows, the business has filed bankruptcy. Will we get our money back?

Ask the AG

Consumer: My fiancé and I paid $2,500 to reserve a venue for our upcoming wedding. Weeks before we’re scheduled to exchange vows, the business has filed bankruptcy. Will we get our money back?

Attorney General Rob McKenna: The weak economy means that an increasing number of retailers and service providers are shutting their doors. If you paid your deposit with your credit card, you may be able to request a refund known as a “chargeback” from the card issuer. But if you paid by cash or check, your option is to file a claim with the bankruptcy court and wait to see what happens.

If a company files for bankruptcy, it’s up to the court to decide which financial obligations are honored. You may receive all, some or none of your money back. You should consider whether the inconvenience and expense of pursuing the claim are worth the potential benefit.

When companies go broke, the Washington Attorney General’s Office frequently hears from consumers who are left with empty wallets or other woes. Buyers may lose deposits on ordered merchandise or services. Gift cards may become worthless. Warranties and repair plans may become void. While bargains can be found at liquidation sales, consumers who aren’t satisfied with their purchases usually have little recourse.

Many problems can be avoided if consumers follow these tips:

• Pay the smallest deposit possible for merchandise or services you will receive later.

• Pay with a credit card because laws provide you with safeguards if the business fails to deliver your merchandise or provide a service.

• Use gift cards as quickly as possible and avoid buying cards from financially-strapped retailers.

• When shopping liquidation and going-out-of-business sales: remember that there are usually no refunds; inspect the merchandise before you buy; verify warranty coverage, as most stores won’t be able to honor their own warranties and service policies after they’ve closed (a manufacturer’s warranty or extended service contract backed by a third party may cover repairs); and compare prices elsewhere.

We’ve created a Web page at www.atg.wa.gov/outofbiz.aspx to help consumers prevent common problems and deal with them when they occur. The site also includes information for retailers, which must follow certain procedures when advertising and conducting going-out-of-business sales.

Want more consumer advice? Check out the attorney general’s all consuming blog at www.atg.wa.gov/allconsuming.aspx.

• • •

Attorney General Rob McKenna offers this public service to help consumers avoid fraud and to promote a fair and informed marketplace. If you have a consumer complaint or inquiry, contact the Consumer Protection Division atwww.atg.wa.govor 1-800-551-4636 between 8 a.m. and 3 p.m. weekdays. To suggest a future topic for this column, write to “Ask the AG,” Attorney General’s Office, 800 5th Ave., Suite 2000, Seattle, 98104-3188.

More in Business

GE’s tumble from grace | Don Brunell

General Electric, once the world’s most valuable company, has been topped by Walgreens.

Vintage items, gifts and more at new Enumclaw shop

Featuring an eclectic mix of merchandise, partners Tori Ammons and Melissa Oglesbee… Continue reading

The role models around us

Sometimes, being a good role model is a good business decision, too.

Seattle’s misstep highlights need for new approach

Last week, Seattle’s City Council did an “about face” revoking the onerous… Continue reading

Washington’s expensive culvert court case

Too much money is spent in court where it should go to increasing the salmon population

Straw pulp looks like a game changer

250,000 tons of straw will soon be pulped for paper products.

Bad labels tough to shed

Seattle’s going to have a hard time battling the “anti-business” label.

Lt. Dan needs lots of helping hands

Gary Sinise formed the “Lt. Dan Band” in early 2004 and they began entertaining troops serving at home and abroad. Sinise often raised the money to pay the band and fund its travel.

New Enumclaw wine bar aims for broad audience

Bordeaux Wine Bar is scheduled to be open Wednesdays through Sundays.

Streamlining regulations makes more housing affordable

There were over 21,000 people homeless in Washington State last year.

New approaches needed to fight super wildfires | Don Brunell

Last year, wildfires nationwide consumed 12,550 square miles, an area larger than Maryland.

Skilled trade jobs go unfilled in our robust economy

Known as blue collar jobs, they routinely pay $45,000 to $65,000 a year or more.