What to know: My Sister's Closet family drama shines light on Arizona consignment business

A legal battle among three sisters is turning My Sister's Closet inside out.

Two of the store's namesake sisters accuse the owner of cheating them ― and consumers ― out of millions of dollars.

Jennifer Siner and Tess Loo told The Arizona Republic their older sister uses the Phoenix-based company as a personal ATM to fund a lavish lifestyle.

Owner Ann Siner denied wrongdoing. She described her sisters as disgruntled former employees trying to damage the company she has run for 32 years.

Here is what to know about the dispute.

What is My Sister's Closet?

It is a popular consignment store focusing on high-end fashion and designer merchandise. It seeks brand names and won't take anything that retailed for less than $75 and older than five years. Since the opening of the first store in 1991, My Sister's Closet has spun off two related businesses: Well Suited, a men's fashion store, and My Sister's Attic, a furniture store.

The stores operate under the umbrella of Eco-Chic Consignments Inc., which has 10 locations, eight in Arizona and two in Southern California. Their annual revenue was about $30 million, Ann said in a 2021 interview.

'They hate me right now': Allegations fly in family drama spilling out of My Sister's Closet

Is My Sister's Closet a family business?

Yes and no. The narrative of how the stores started has changed. Ann used to say she co-founded the first store with her sister Jennifer. In recent legal filings, Ann said she started the business and then hired Jennifer as an employee. Tess joined them in 2010. Neither Jennifer nor Tess works for the company now.

What are the sisters fighting about?

Money.

The two younger sisters say Ann paid them about $100,000 in annual salaries while she took home millions.

Ann said she gave her sisters shares in the company, jobs, cars and even financed their home purchases with loans. She said she took all of the risks, signed the leases and put her name on financial forms.

In court filings, Jennifer and Tess claimed Ann defrauded them of valuable company dividends they were owed as shareholders. They also claimed Ann used deceptive practices in offers to buy out their shares for less than they were worth.

How much is at stake?

Ann said her sisters are suing her for as much as $6 million. In court filings, she maintained her sisters got all of the money that was owed to them and that an independent financial firm determined the value of their shares.

But more than money is on the line. The younger sisters have raised questions about Ann's business practices and contend she used the stores to gouge consigners out of money and merchandise. Ann has denied the allegations.

Why should I care about a family drama?

The fight offers a rare glimpse into the little-regulated world of secondhand retailers, where consumers have little control over fees and the value of merchandise they entrust stores to sell.

The United States has about 25,000 resale, consignment and nonprofit stores, with more opening every day. Analysts call the resale industry "recession-proof."

More accusations: Customers were cheated, employees mistreated at My Sister's Closet, owner's siblings claim

Are customers shortchanged at My Sister's Closet?

Jennifer and Tess said the stores' contract gives the company the right to do whatever it wants with consigned items. They said Ann created a way to take $1 out of every item sold without fully disclosing it.

The contract was revised in April, after The Arizona Republic questioned Ann about the previously undisclosed fee, records show.

Many consumers complain online about lost items that store managers refuse to refund.

Ann would not discuss the fee, which she called a trade secret. She maintained items are carefully monitored and said customers receive refunds for any items that are lost. The contract, however, indicates the store is not responsible for lost or damaged items.

Could my consignment items end up at a thrift store instead?

Yes. Jennifer and Tess said they helped Ann move items to the company's thrift shop in Chandler, sometimes without being put up for sale first at My Sister's Closet.

The practice helps free valuable retail floor space. The nonprofit thrift shop, called My Sister's Charities, takes in unsold items from the other stores and marks down prices significantly. Money from thrift shop sales goes to charities that Ann supports, including the Arizona Humane Society.

Ann said items stay on the retail floors for up to 90 days before being moved out, and she never has authorized early removal. The contract does not contain any language about how long stores must keep consigned merchandise.

Did employees complain about abuse and harassment?

Complaints from former workers dominate some employee review websites, although positive reviews exist.

Some former employees complained that My Sister's Closet has a toxic work environment. Others told The Republic that Ann taunted them over their appearance, clothes, work ethic or intelligence.

They said they endured her abuse because they couldn't afford to lose their jobs.

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Jennifer and Tess said Ann also heaped abuse on them. Jennifer said she quit in 2019 to seek therapy for post-traumatic stress disorder. Tess said she was fired in 2022 without explanation.

Ann said she is a tough and direct boss but denied abusing employees. She said both of her sisters left the company under clouds and accused both of committing crimes related to the company.

Robert Anglen is an investigative reporter for The Republic. Reach him at robert.anglen@arizonarepublic.com or 602-444-8694. Follow him on Twitter @robertanglen.

This article originally appeared on Arizona Republic: What to know about My Sister's Closet consignment stores in Phoenix