2nd Time Around's Unpaid Consignors Resort to ‘Looting’ Stores

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Since last Wednesday, Manhattan’s Houston Street location of consignment chain 2nd Time Around has sat padlocked, its racks and shelves still stocked with Chanel bags and DVF dresses handed over by consignors before the landlord finally made good on his eviction notice. On its website, the retailer posted a "going out of business" announcement the same day, redirecting all calls to a third-party restructuring firm and adding a note in the FAQ section that consignors whose items sold before May 1st may not be paid at all.

Irate consignors have since taken to Facebook, Yelp, Twitter, and Instagram with complaints about months-overdue checks for hundreds or even thousands of dollars, accusations of fraud and breach of contract, and threats of legal action. The situation in stores is no better — except that rather than a faceless digital handle or social-media feed bearing the brunt of the frustration, it's employees that are on the front lines. Unable to get answers about the whereabout of their checks or property, angry consignors have trashed signage, hurled verbal abuse, and grabbed merchandise from the shelves as compensation, say employees.

"Particularly in New York, it's been very difficult," says one employee, who declined to be identified as she still works for the company and will soon be looking for a new job. "Camera crews have been barging into stores and causing utter chaos. We've had to call the police because customers have physically put their hands on employees. It's unnerving and it's scary to go to the store when it's not even supposed to open for 45 minutes and there's already a swarm of people ready to jump. They're trying to push in the door while you're unlocking, and you still need to turn on the lights and turn off the alarm, and they're just trying to force their way in."

To deal with the situation, she continues, "We have to remember that it's our job, number one, and number two, you have those moments throughout the day where you have a really amazing person come in and they're owed thousands of dollars, and they're upset, but they're a human being, and they look at you and say, 'I am so sorry that you have to deal with this, because this is not your fault, and I feel so bad for you.' And those types of people just remind you that there is still some humanity out there, but in this world that we live in where people want instantaneous results from everything, the majority of customers have not been that way. People come into the store and they try to take other things—they think because I can't give them cash, or I can't give them a check or whatnot, that they can just take somebody else's personal item as compensation. So we have that that we're dealing with. We have consignors literally coming into the store trying to loot us!"

Despite these tactics, the staff share consignors' frustrations ("they have money owed to them, and I understand that") and echo one of their most common refrains: that getting clear information from the company's corporate level — about if and when checks will be sent out or whether a store was in trouble — has been close to impossible, especially in recent weeks.

Lily, a former store manager, quit about a month ago after a consignor who was owed money spit at her in a rage — though she says the final straw was the lack of support or information that management offered to deal with the increasingly tense work environment. In April, the company, which at its peak operated 40 stores nationwide, announced that 10 were closing, including locations in Miami, Florida; West Hartford, Connecticut; and Evanston, Illinois. While employees grew increasingly worried about the security of their stores, she says, "if you asked questions, it was met with a lot of hostility... all communication was just kind of shut down."

Higher-ups at the company "would tell us 'business as usual' — that was the wording we were given, even though that's definitely not what it felt like in store," she recalls. "People were coming in very, very angry. There were violent consignors. There were police called many days. It would just be these very angry conversations because we didn't have any answers, so of course that makes people very upset."

The incidents hurt the bottom line, too. "Customers would overhear these conversations and they would ask us what was going on. Business got really slow. Numbers definitely dropped very significantly, because a lot of our customers were our consignors."

At a time when human interaction is less and less a part of the shopping experience, 2nd Time Around stores retained a sense of community. This is in part because of the company's history: it was founded in 1973 and has since become thoroughly entrenched in many East Coast neighborhoods, particularly in Boston, where the company is headquartered and where its Newbury Street location has been open since 1992. Consignment is also a particularly intimate business, with consignors entrusting their local stores to price and sell their personal items, which may be imbued with sentimental value or freighted with memories. And while these factors no doubt contributed to the company's success over the years, they also seem to have added to the sting of its failures.

"We have consignors that have been dealing with us for years — decades, even — that have never experienced these issues before, and then suddenly they're having these issues with not being able to get their checks and their payments, and that can only go on so long before it just starts to implode," says the current employee.

The issues the company blames for its financial troubles will be familiar to anyone with even a passing knowledge of the recent carnage in the retail sector — "skyrocketing rents" and "increased competition from online retailers" — but the nature of the consignment business adds an extra layer of complexity and human fallout to the process. While traditional retailers can hire a liquidation company to sell off excess inventory and handle store shutdowns, 2nd Time Around doesn't actually own any of the items hanging on its racks, and has a legal responsibility to each and every one of its thousands of active consignors to pay once their items sell.

Upon dropping off their items, consignors sign a “Terms and Policies” agreement stipulating that they will receive 40 percent of the sale price for all goods over $100 (with higher percentages offered for handbags), and that checks are mailed on the 15th of each month. There is a clause absolving the company of responsibility "for loss by theft, damages, negligence, or other cause," but according to Adam Singer, a consumer litigator in New York, this is more likely to cover events like fires or floods than a loss of access following a legal eviction, and the company is still obligated to pay for sales that have already been made.

"It seems like the people who admitted the items would be able to sue, either for a return of the property from the store or payment," he says. "They don't have the property, so they have a right to get the payment according to the terms of the contract." In New York state, Small Claims Court covers claims up to $5,000, and fees are $15 to $20 per filing. "I would suspect that some consumers whose merchandise is worth under that amount, they could go to Small Claims Court and try to collect," he says. Whether consignors have grounds for a class action suit, as many have threatened on social media, would depend on whether they could prove that the company employed "deceptive acts and practices" under the law, which Singer is skeptical of. "I think the people who dropped off merchandise probably have claims for a breach of contract, but I think the issue is going to be, if the store is closing, how are they going to collect?" he says.

That scenario — that the company simply won't have the money to pay up — is exactly what many consignors say they fear. Stephanie, a consignor in New York who says she's owed $472 in checks and has around $200 in merchandise locked in the Houston Street store, started a Facebook page, 2TA Needs to Pay, in order to compile information from others like her and give people a space to vent about their experiences and share links to public offices like the Massachusetts Attorney General, the Better Business Bureau of Boston, and the New York Department of Consumer Affairs.

"Maybe I'm over-dramatizing it," she says, "but what I said to the customer service person who was recording our conversation was that this is like the 2008 financial crisis of the fashion world. You have a corporation screwing over the little guy."

Especially maddening to some is the opaqueness around who the corporation's executives are (and, thus, who to blame). The 2nd Time Around website has no information about the company's leadership, although news reports reveal that the company has been majority-owned by private equity firm Generation Equity since at least 2011, during which time the role of CEO changed hands from founder Jeffrey Casler, first to Bill Soncini and later to Kristin Kohler Burrows, who launched e-commerce and invested in a nationwide rebranding, including a new name (the company was previously known as Second Time Around), logo, and a more contemporary aesthetic before leaving in December 2016.

It was soon after this that consignors started complaining about checks bouncing or arriving months late, though at the time, they say, they were assured that they would be paid in full and that any payment issues were temporary — the result of switching banks or technical difficulties. Five months later, it seems clear that was never the case, and far less certain whether consignors will ever be able to recoup their money or property, especially as locations close and sales are stunted by frenzied store environments. In the case of the padlocked Houston Street store, the company's website instructs consignors to direct complaints to the building landlord, Eric Nelson, whose contact information they posted in full — a jerk move, per Nelson, who says he can't do anything to help consignors beyond directing them to the Department of Consumer Affairs, who is handling the complaints.

In a statement sent to Racked via the public relations firm it has retained, 2nd Time Around reiterated the same points posted on its website and emailed out to customers over the weekend, saying that it is committed to paying consignors for sales made after May 1st, and that further information about sales before that date will be forthcoming, pending the remaining sales. "We share the disappointment that this announcement brings to our loyal and valued employees, consignors, and customers," it says.

For employees who are tasked with returning unsold items to customers, selling through what they can, and breaking down the stores to return them in broom-swept condition to their respective landlords (who, in some cases, have been barging in for weeks demanding money from whatever college-age store associate happens to be working that day, say employees), the situation is especially bleak.

"These were the mistakes of people way above our pay grade. These were the mistakes of people in the corporate entity that did not manage this business properly, and we are just as frustrated as these consignors," says the current employee.

"We feel so terrible for people who are on a fixed income and were just looking to make some money by selling some of their items and we can't pay them. That doesn't make us feel good. That makes us feel terrible. We would never wish that upon anybody, and we're unfortunately the only ones that people have to deal with it. We're all losing our jobs at the end of this, so there's really no light at the end of this for us except just to go out with a little bit of dignity and try to do right by as many people as we can for other people's wrongs."