Better Business Bureau of Southern Arizona is alerting consumers to the “Emergency Liquidation Center,” which is holding a self-described “bankruptcy liquidation” in Tucson at 4380 Oracle Rd. in the former Ultimate Electronics retail space.

In its commercials, Emergency Liquidation Center claims to sell a host of items for $5, including electronics, clothing, and accessories. However, consumers tell BBB that after paying a $5 admission fee to enter the store, they found very few products for $5.

“The commercial said that everything was $5,” said Liz Encinas, who showed up at the Oracle location after hearing Emergency Liquidation Center’s commercial on the radio.

“None of it was cheap,” she said. “The only thing we saw that was $5 was a table of shirts.”

Emergency Liquidation Center- which has an ‘F’ rating with BBB- is owned by Aroma Senses, LLC, based in Columbus, Ohio. The company told BBB that they buy merchandise from various retailers who have gone out of business, or from companies like Target or Kmart who have stores with excess inventory.

When BBB asked Aroma Senses owner, Sunil Pehouja, which bankrupt retailer the company’s Tucson merchandise came from he said: “it’s very hard for us to say this product is from so and so company;” (more…)

Better Business Bureau of Southern Arizona is warning financially troubled families to beware of misleading debt settlement companies that claim they can easily reduce or eliminate credit card debt.  Since the start of the recession, BBB’s nation-side have received more than 3,500 complaints from individuals, including many who paid hundreds of dollars in upfront fees to debt settlement companies but only fell deeper into debt.

Locally, BBB has received seven complaints from Southern Arizona consumers against debt settlement companies, and average monthly inquires into the companies have increased 200 percent since the start of the recession.

“The debt settlement industry is flourishing and many families are being lured into believing that debt settlement is an easy fix,” said Kim States, BBB President. “The truth is that the process doesn’t work for many consumers, it has potentially serious negative consequences, and should primarily be used as a last ditch effort to stave off bankruptcy.”

Consumers from all 50 states have filed complaints with BBB about debt settlement companies since the recession began in late 2007. In addition to BBB, angry customers are also taking their complaints to their state Attorney General. Attorneys General from Florida, Maine, Texas, Idaho, Missouri, New York, Illinois, West Virginia, Vermont and Minnesota have taken action against companies such as Dallas-based Debt Settlement America, Debt Rx USA, Financial Freedom of America and Credit Solutions—which has received more than 1,600 complaints alone in the last 36 months—and Austin-based Clear Your Debt and Swift Rock Financial Solutions.

Some practices by debt settlement companies are also coming under fire on Capitol Hill. On April 28, Senator Charles Schumer (D-NY) introduced The Debt Settlement Consumer Protection Act, which seeks to “protect consumers from deceptive, abusive and financially injurious practices rampant in the debt settlement industry.”

Typically with debt settlement (also referred to as debt negotiation), the consumer pays an upfront fee to the debt settlement firm with the understanding that the company will try to negotiate a settlement with creditors for less than what is owed. The debt settlement business works with the consumer to establish a plan for the consumer to put money into an account administered by the debt settlement company or a third party, and that money is used to pay any negotiated settlements. It will usually take at least six months to a year before there is enough money to start settling accounts, and during that time the consumer will typically not be making payments to creditors. Not only does this put the consumer at risk of having creditors file garnishments or other legal actions, his or her credit rating will likely suffer as a result of not making required monthly payments.

Complainants to BBB allege that instead of having their debt settled as promised, they were driven deeper into debt and sometimes sued by their creditors—which led to mounting legal fees—and had (more…)

As a result of the declining economy, the number of retailers closing their doors has increased substantially, leaving confused shoppers wondering what will happen to purchases they haven’t received, incomplete repairs, unused gift cards, and warranties.

Following is advice from Better Business Bureau of Southern Arizona on steps consumers can take if a retailer goes out of business:

What can I do if a retailer goes out of business but doesn’t officially file bankruptcy?

Send the company a letter because their mail may be forwarded. Physically go to their location to see if they left a message on the door for customers. Ask neighboring businesses if they have any information. Try to reach the owner. If you have merchandise in the store, contact the landlord to see if you can be given access to the company’s facility. As a last resort, contact law enforcement.

Warranties

Once in a while, contacting a manufacturer results in you receiving partially or fully-paid-for items even when the retailer is no longer operating. The validity of any outstanding warranties varies for each bankruptcy. If a retailer goes out of business, the consumer may be able to rely on the manufacturer’s warranty. If a manufacturer goes out of business, the consumer may be able to rely on a retailer warranty. Many extended warranties and service plans are provided and administered by third parties and are typically not affected by a retailer or manufacturer closing its doors.

Bankruptcy: Chapter 11

Some companies file Chapter 11. This allows the company to continue operations while it reorganizes for future stability. If Chapter 11 is filed, the company will often still redeem gift cards, fulfill services and deliver on goods. Unfortunately, some Chapter 11 bankruptcies turn into Chapter 7, which provides for closure and complete liquidation. Then the chances for the consumer to receive any compensation are greatly diminished.

Bankruptcy: Chapter 7

Under Chapter 7, the money gained from selling the company’s assets goes to back taxes, secured creditors and employees. That usually depletes available assets. If any assets are left over, they are divided among unsecured creditors, including customers who didn’t receive services or goods already paid for.

Customers who paid with credit cards may be able to dispute the charge with their credit card company to get their money back. Others who paid by debit, check or cash, will need to file a claim with the bankruptcy court administering the process. The deadline is typically 90 days after the filing date. Visit www.uscourts.gov.

Gift Cards

With Chapter 11 bankruptcy, courts will decide if the business must honor gift cards. Under Chapter 7 bankruptcy, the holder must file a claim through the bankruptcy. To avoid problems, BBB advises that consumers redeem gift cards as soon as possible.

For more information visit www.tucson.bbb.org.