I was contacted yesterday afternoon by a local television reporter about La Renaissance, a local banquet hall that is facing foreclosure but has allegedly continued to take deposits from its customers.  Some of these customers have weddings scheduled to take place after the hall is scheduled to be sold at auction.  The auction was supposed to take place a few weeks ago but was postponed due to the blizzard.  

Was it unfair for a banquet hall facing foreclosure to continue to accept deposits from customers?  I was interviewed on camera [here’s a link to the story] and was asked that question.  I am shown saying that it is unfair and deceptive for a business to take deposits from unknowing customers on the eve of foreclosure and that this conduct violates consumer protection laws.  That was a fair representation of my answer to the question, but I did have more to say on the subject than depicted.

As someone who started a small business, I understand the pressures that businesses can face.  The only chance that a struggling business has to survive is to get more customers and to bring in more money.  An ethical business should be concerned with multiple constituencies.  Yes, its customers are important, perhaps even paramount.  But, businesses should also be concerned about employees who depend upon a paycheck. Many of those employees have families, and a business should be concerned about them as well.  A struggling banquet hall probably has creditors that are owed money, and these creditors likely include other small businesses such as food vendors, cleaning companies, and landscapers.  Those companies also have employees with families.  So, there is nothing unethical about a small business struggling to keep things afloat.

But, there comes a point when a rational business owner must acknowledge that the situation is not salvageable.  There is something seriously wrong with continuing to take deposits from customers when there is no reasonable hope that a business can deliver what has been promised.   The situation with La Renaissance is particularly sad, because some of these customers are young couples planning their weddings.  I do not know the details of these transactions, but I fear that the outcome will not be good.