Attorney General Andrew M. Cuomo today announced an agreement with the liquidators of the Uniondale-based jewelry and furniture chain Fortunoff, to honor consumer gift cards and credit slips through March 8, as the company pursues bankruptcy. It is estimated that there are approximately $8.5 million worth of unused gift cards and credit slips currently in circulation.

Earlier this month, Fortunoff stopped accepting gift cards even though the stores remained open, leading dozens of consumers to file complaints with the Attorney General’s Office. Upon learning that Fortunoff – with locations throughout the New York City Metro Region, Long Island and Westchester County – was going out of business, the Attorney General’s Office urged the company, and any liquidation company that takes over the stores’ going-out-of-business sales, to honor customer gift cards.

Attorney General Cuomo today urged consumers with Fortunoff gift cards to use them before the March 8 deadline. While all purchases made during the going-out-of-business sale are final, the liquidators will also honor Fortunoff’s return and exchange policy through March 10 for items purchased before February 25.

Fortunoff’s going-out-of-business sale will be operated by a group of liquidating companies that will bring in additional goods, including jewelry, to sell alongside Fortunoff’s existing inventory. Consumers should check item tags to determine whether the items were brought in by the liquidator or were part of Fortunoff’s inventory, as clear identification of all liquidator-added merchandise is required. Additionally, consumers should do product and brand research and price comparison before making purchases.

In light of the current economic crisis, the Attorney General’s Office provides the following tips about going-out-of-business sales:

Most going-out-of-business sales are operated by liquidation companies that bring in outside goods to sell along with the store’s existing stock. It is difficult to know if “discounts” on these outside goods provide real savings, since the products were never offered in the stores at the listed “regular” price.
Discounts offered at the beginning of going-out-of-business sales may be smaller than discounts offered immediately prior to the liquidation sale or discounts offered by competing retailers. Consumers should comparison shop to see if they are indeed getting a good deal.
Purchases made during going-out-of-business sales are final. Consumers may want to choose products that come with a manufacturer’s warranty that offers protection against defects and damages. In addition, consumers should also pay by credit card, as many credit card companies offer consumer protections for refunds for defective or damaged products.
Consumers should research the products and their prices from other retailers ahead of time to see if they are indeed getting a good deal.
While it may be tempting to wait for the end of a liquidation sale when discounts are greater, often consumers who do so are disappointed by empty shelves. Consumers with gift cards should not wait to use them.
As increasing numbers of retailers shut their doors, more consumers will be holding unusable gift cards. While some stores continue to honor gift cards even after filing for bankruptcy, others, like Fortunoff, stop accepting gift cards or lack the funds or merchandise to honor them.

When stores stop accepting gift cards or shut down altogether, consumers may only be able to receive reimbursement for the value of their unused gift cards if they file a Proof of Claim in the retailer’s bankruptcy proceeding. In bankruptcy proceedings, gift card holders are considered “unsecured creditors” and must stand in line behind secured creditors. By filing a Proof of Claim, gift card holders do have what is referred to as a “priority claim” and may be able to receive reimbursement for the value of their cards. While such recoveries are more likely to happen in Chapter 11 reorganization, consumers chances of receiving value are significantly diminished if there is a liquidation. However, consumers’ chances of receiving value are significantly diminished if there is liquidation.

(YWN Desk – NYC)