Best Buy, the nation’s largest electronic retailer, has two major legal battles on its hands as it defends itself against accusations from Connecticut Attorney General Richard Blumenthal and New York class action lawyers Kantrowitz, Goldhamer & Graifman.
In federal district courts in New York, California, Illinois and New Jersey, Best Buy has been sued on claims that it failed to follow its advertised price-matching policies, and in Connecticut state court it faces accusations that it had illegally used an intranet site to fool customers into thinking that ongoing sales on its public Internet site had ended.
Attorney Michael Braunstein said this week that his New York firm had filed suits against Best Buy in the other states after winning a major victory in New York, where the 2nd Circuit Court of Appeals last month refused to decertify the New York case as a class action suit. Most likely the suits will be consolidated into one major class action case as the allegations are similar.
Best Buy, which has denied all allegations and is vigorously defending itself in the suits, had no comment Wednesday on the legal actions.
The suits allege that Best Buy is violating consumer protection laws by failing to honor its public price match guarantee.
“Since price matching is unprofitable, Best Buy has an undisclosed policy of erecting strategic barriers to aggressively deny customers’ price match request,” the New York law firm said in its recent press release on the additional lawsuits.
The New York suit was filed in January 2008 and includes claims from former Best Buy employees including from Juan Ortiz, who was a supervisor at three Connecticut Best Buy stores.
Ortiz claims that each Best Buy store denied, under management orders, more than 100 legitimate customer price match requests per week.
“Furthermore, Best Buy’s own records reveal that the price match guarantee was applied inconsistently and 60 percent of customer requests to match warehouse club prices are wrongly denied,” the judge in the case ruled when he permitted class certification.
The judge’s decision also mentions how Best Buy had a secret intranet site in its stores that was used by salesmen to deny sales prices offered in its bestbuy.com Internet site.
That scam was disclosed by me in February 2007 when I worked for The Courant as its investigative consumer columnist.
As a result of my Watchdog columns, Blumenthal filed his lawsuit, which is mired down in technical motions. Connecticut Consumer Protection Commissioner Jerry Farrell said after the suit was filed that he and Blumenthal offered to settle the case for several million dollars, but Best Buy, insisting it did not do anything to warrant such punishment, refused the offer.
With the help of East Hartford teacher Eric Hammer, I disclosed that Best Buy had a secret intranet site in its stores — one that mirrored the public BestBuy.com Internet site, but with different pricing. The intranet prices usually reflected the individual store’s prices, not the public Internet prices, which Best Buy since 2005 has promised to honor.
Best Buy changed the intranet site after my disclosures so it no longer looked the same as the public Internet site.
Best Buy officials have denied that the in-store intranet site was devised to confuse employees or customers. They said the intranet site was set up only to let people know what was available in the stores, not to deceive customers. Only a small percentage of customers were adversely affected, they said.
“Once this issue was brought to our attention, we provided immediate training for our employees to help ensure that all customers received the best price. We are in the process of making changes to eliminate future confusion” the company said two year ago.
Blumenthal, however, wasn’t buying.
“Best Buy gave consumers the worst deal: a bait-and-switch-plus scheme luring consumers into stores with promised online discounts, only to charge higher in-store prices,” he said. “Best Buy treated its customers like suckers, not patrons to be prized.”
Farrell added, “It is extremely unfortunate that this company misled consumers as to what the `best buy’ actually was.”
To read more about the New York suit, see:
Memorandum of Law in Support of Motion for Class Certification
Reply Memoradum of Law in Further Support of Motion for Class Certification
Perhaps they should also be forced in the suit to be renamed to “Bait and Switch” or “Sucker Punch” lol.
You would think New York’s AG would know better.
Bait and Switch Advertising
§ N. Y. General Business Law § 396
A store cannot advertise or offer for sale merchandise or services with the purpose of either not selling the good or service at the advertised price, or not selling it at all. Unscrupulous merchants have been prosecuted by the State Attorney General for advertising an item at a sale price without having the item in stock. In this “bait and switch†tactic, merchants will try to convince consumers to buy a more expensive item than the one advertised.
May be a bit of a problem, here…depending upon where it was advertised, and by whom.
I hope Mr. Ortiz likes being sued, also.
As far as Attorney Michael Braunstein’s comments are concerned; it would seem that action (consolidation into one major class action case) makes it easier for all those claims to be dismissed as a group, as well.
Tom:
You don’t know much do you. The class was certified in New York, and will be certified in the other states. Best Buy is going to settle. Not if, just a matter of when. You sound like you work for them.
Walmart.com has an interesting online marketing strategy as well. Customers can purchase some products at a lower cost online and have them shipped FREE to their local store for pickup. But a customer cannot just walk into the store and purchase the very same product at the lower price. Example: IPOD Touch 8GB online for $188.95 shipped free to your store. Walk-in customers pay $195.00. It’s correctly documented online that: “Online and store prices may differ, and prices may vary from store to store.” If they already have the stock in the store, one would think it would be priced the same as having it shipped specially to the store for the customer. Some screwy marketing I’d say.