State statutes limit the use of the term “wholesale” in advertising and allow for media liability for knowingly publishing unlawful wholesale advertising. No one may advertise the sale of merchandise at “wholesale” prices unless that term is lawfully used as part of the advertiser’s “company or firm name;” the advertised sale is for resellers that have a license issued and recorded by the state; or the advertised prices are “established by an independent agency not engaged in the manufacture, distribution or sale of [the advertised] merchandise.”[346] Using the term “wholesale” in violation of these requirements is an “unfair trade practice” under the state Unfair and Deceptive Trade Practices Act (UDPTA) discussed earlier in this chapter.[347] However, print and broadcast media that publish and disseminate advertising cannot be held liable for a violation of these provisions unless they knowingly publish an unlawful wholesale advertisement or have a financial interest in the wholesale being advertised.[348]
State statutes also require that anyone advertising a “closing-out sale” or a “distress sale” must have obtained a license to conduct the sale from the clerk of the town or city where the sale is being conducted.[349] Under the statutes, a “closing-out sale” means any sale that is advertised with descriptors such “going out of business,” “selling out,” “liquidation,” “lost our lease,” “must vacate,” “forced out” or “removal.”[350] Similarly, a “distress sale” generally includes sales “in which it is represented or implied that going out of business is possible or anticipated, in which closing out is referred to any way, or in which it is implied that business conditions are so difficult that the seller is forced to conduct the sale.”[351] The licensing requirement also applies to any sale that advertises reduced prices for items that have been damaged by fire, smoke or water.[352] Advertising these types of sales in violation of the statutes is a Class 1 misdemeanor,[353] although media outlets are exempt from liability for publishing a false advertisement for these sales unless the media outlet refuses to identify the advertiser when requested to do so, in writing, to a North Carolina state agency including law enforcement.[354] In addition, the requirements for conducting and advertising closing-out and similar sales do not apply to sales ordered by a federal court or a state court in North Carolina.[355]
[346] N.C. Gen. Stat. § 75-29(a). In addition, the statutes limit the use of the term “wholesale” in company and firm names to bona fide wholesalers that meet statutorily-defined criteria. Id. at (a).
[347] Id. at (b) (referring to N.C. Gen. Stat. § 75-1.1, which prohibits unfair methods of competition and unfair and deceptive practices and acts).
[348] N.C. Gen. Stat. § 75-1.1(c).
[349] N.C. Gen. Stat. § 66-77. If the sale is being held in an unincorporated area, then the license must be obtained from an appointee designated by the board of county commissioners that has jurisdiction over the unincorporated location where the sale is being held. Id. The licensing requirements apply to “person,” which includes “individuals, partnerships, voluntary associations and corporations.” N.C. Gen. Stat. § 66-77.
[350] N.C. Gen. Stat. § 66-76.
[351] Id.
[352] N.C. Gen. Stat. § 66-77(a).
[353] N.C. Gen. Stat. § 66-81.
[354] N.C. Gen. Stat. § 66-82. The exemption also applies broadly to any “other agency or medium for the dissemination of advertising.” Id.
[355] N.C. Gen. Stat. § 66-82.
