FTC about rip Gamestop a new one over selling played games as new

[ManaByte]

http://kotaku.com/5205385/gamestop-sells-played-games-as-new-sources-say-practice-could-be-illegal

The alleged practice of GameStop lending new copies of games to employees at their stores and then later selling those games as new, unused copies, may be a violation of federal law.

GameStop's "check-out" policy, confirmed to Kotaku by a number of the chain's managers and employees, could fall under scrutiny of the Federal Trade Commission.

Reached for comment this afternoon, GameStop officials declined to comment.

"We do not comment on corporate policies that are competitive in nature," said Chris Olivera, vice president of corporate communications. "As your questions relate to company training, operations and discounting practices, I would not be able to provide feedback."

Kotaku contacted the FTC earlier today to determine if the practice, which sells games already played by employees at the new price, not the used price—used titles are typically priced about $5 cheaper than brand new versions—would be considered deceptive advertising or marketing. The FTC's Bureau of Consumer Protection is mandated to protect consumers against unfair or deceptive acts or practices in commerce. Violations of FTC restrictions are a violation of federal law, according to the commission.

"The Federal Trade Commission protects consumers from unfair or deceptive advertising and marketing practices, and we encourage any consumer with a complaint about a company's business practices to contact us," said FTC public affairs specialist Betsy Lordan.

Lordan said she was unable to confirm or deny the existence of any investigation that the commission is conducting. As a rule the FTC does not comment on the conduct of a particular business.

The company's check-out policy, provided to us and verified by a number of GameStop employees states:

    Associates are allowed to check out one item of store merchandise for personal use for up to four days. Merchandise checkout is a privilege, not a right, and may be revoked at any time.

    Hardware, accessories, sealed CDs or software programs that must be altered to install may not be checked out. If the on-hand quantity of a product equals one, the item cannot be checked out. Hot titles may also be prohibited from being checked out, regardless of the on-hand quantity in the store.

    Associates may only check out items from the store in which they work. Associates are personally responsible for any merchandise they are allowed to check out.

    Merchandise must be properly checked out in the Employee Merchandise Check Out Log in the Game Planner.

    If the product is returned in unsellable condition, or if anything is missing from the package, or if the product is not returned, the Associate must purchase the product at the current price less Associate discount.

    Copying of the software and/or manuals/instructions is illegal and is strictly prohibited. Merchandise that leaves the store without being properly checked out or purchase is considered to be unauthorized removal of Company property and may result in performance coaching up to and including termination of your employment.

According to a number of GameStop employees and managers across the country, all of which spoke to us on the condition of anonymity, new copies of games rented out to employees are often mixed in with the unplayed display copies. And both are sold at "new" prices.

When a shipment of video games initially arrives at a store, managers are told to "gut" several copies of the game, removing the disc or cartridge from the packaging so it can be displayed on the shelf without concern of theft, according to our sources.

The games are then placed in protective sleeves or cases under the counter. If a customer asks why the game is not sealed they are typically told the the game is a display copy. The game is still sold as new.

When check-out games are returned, we were told, they are placed with the gutted display copies. If a customer asks about these, they are typically told they are display copies, not that they have been played before.

Since the copies are often placed with display copies, even managers and employees typically don't know which of these games have been played and which haven't.

While some GameStop managers will on occasion offer a "Shop Worn Discount" for a gutted or checked out title, we are told by our sources that this is actually against GameStop policy which states:

"Do not apply Shop Worn Discounts to any new, used or checked out games, it may only be applied for damaged packaging and new accessories which have been opened."

Headquartered in Grapevine, Texas, GameStop is the world's largest video game retailer, operating nearly 6,000 stores worldwide. The company's revenue was $8.8 billion in 2008.

[The Fake Shemp]

All true.

[Joe Molotov]

So instead of paying $60 for a "new" gutted game, you'll now get to pay $57.99 for a used game. Would you like a strategy guide with that?

[The Fake Shemp]

Eh, nothing will ever happen.  The company policy regarding employee check outs has existed for years and ManaByte's article title is misleading, since the FTC is not prepared to take any action against the company.

I will say that it was standard policy to pretty much charge any employee that didn't return a game in perfect condition - I had to do it several times.

[duckman2000]

I'm more annoyed by the shitty inspection procedures. I bought Paper Mario a while back, and for some reason I didn't bother checking the disc before leaving the store (checked the other games, though). Turns out the actual disc was cracked, and you would figure someone should have caught that one. Oh well, I don't shop much as GS these days anyway, what with the real deals going down online.

[The Fake Shemp]

If it was used, they're actually trying to address that.  One of my California stores was a test group that used special machines that would tell you if the game discs were in working condition or not.  It became virtually foolproof at that point.  When I moved to the East Coast, those machines had not been rolled out to the entire company yet.

[duckman2000]

Manabyte is like the worst thread author this side of Borys.

[duckman2000]

If it was used, they're actually trying to address that.  One of my California stores was a test group that used special machines that would tell you if the game discs were in working condition or not.  It became virtually foolproof at that point.  When I moved to the East Coast, those machines had not been rolled out to the entire company yet.

Sounds sensible. This one was blatantly visible though, sort of a strange thing to miss. My immediate theory was that it was the former property of one of the employees, game laundering so to speak. It's a mall store, so nothing would surprise me.

[Howard Alan Treesong]

The FTC is is so mad they issued a nonspecific form statement in the same language their website uses.

It'll be great in month when Gamestop is shut down over this.

That's my ManaByte!^TM

[Don Flamenco]

Nice non-article.  already commented on this elsewhere, but they didn't cite anything, there's no investigation.  Kotaku just took a form response and made an article out of it.


George W. Bush to Arrest Bin Laden Tomorrow

"America will not stand for terrorism."  Said Bush in a speech last Thursday.   Sources indicate that Osama Bin Laden is indeed a terrorist, which means that America does not stand for him.  This might mean that he could get busted by the CIA tomorrow. 
--Brian Crescente

[The Fake Shemp]

After working for the competition, I will say their pricing is pretty jacked.  Anyone that goes to trade-in games there versus GameCrazy, unless it's a specific deal (trade in two Xbox 360 games for a copy of whatever game is coming out), is losing a bunch of money.  Also, the policy of discounting recently release used titles only five bucks is kind of nuts.

[duckman2000]

The trade system is just insane in general. I don't even want to think about how badly I've allowed myself to get ripped off through trade-ins. Ideally, I'll sell games to people on various message boards, but even Ebay is a better idea than store trade-ins. Of course, there are those situations where you sit on a bunch of old, pointless games that no one really wants, but in those cases, I think I'm just going to hold on them. Hell, the kid might like them.

[chronovore]

I'd prefer to not think about how much money the dev/pub industry loses every time a used copy is sold. I buy used games myself, but usually it's when the new one isn't available.

It pisses me off when the clerk asks me (and I'm guessing this is corporate policy), "Would you like to save 3 dollars by buying a used copy? They're guaranteed."

No, Columbo, I found the used copies just fine since they have more shelfspace than new games. This is the one I wanted.

[pilonv1]

Also, the policy of discounting recently release used titles only five bucks is kind of nuts.

They have an interesting policy in Australia with big releases. They offer tiered high trade in's if you trade it within 1/2/3 weeks. So it might go (AUS$) 90/80/70 for Halo Wars ($100rrp). Then they sell it at $90 or whatever.

Keep in mind that while all this is going on, other retailers here are putting the same new product out on the shelf for $78-$88. So you can go and buy a new title for $78, go and trade it to EB for $90 (+10% with the card) and make up to $20 credit.

I often wonder (tin foil hat on) if these are deliberate strategies to be able to order less new stock since
1) they can just sell an "as new" one week old game instead, or even an unopened game
2) to encourage people to buy from other stores and instantly trade it in, giving them more "as new" copies to sell

I'm probably thinking too much though.

[MoxManiac]

It's one of the reasons I don't go to gamestop very often anymore. I largely don't feel the need to, anymore. Although I will say that I was very pleased that GS were able to come through with my TE stick preorder day and date with SF4.

[Kestastrophe]

I got into a fight a week or so ago with some distinguished effete fellow, because I called Gamestop's pricing structure highway robbery according to merrian webster, and I said it was reliant on asymmetric information. As expected, there were throngs of others that were defending the practice by spouting platitudes such as "if you don't like the price they offer, don't take it". While obviously true, their ridiculous profits on the used game side is not sustainable and I am surprised that a serious competitor hasn't emerged by taking less margin. Their markup has to be ~40% average on used games. A competitor could come in and markup 25% or so, which is still a healthy profit, while stealing their market share.

*gaff0t filters to distinguished effete fellow, smh

[Smooth Groove]

Also, the policy of discounting recently release used titles only five bucks is kind of nuts.

They have an interesting policy in Australia with big releases. They offer tiered high trade in's if you trade it within 1/2/3 weeks. So it might go (AUS$) 90/80/70 for Halo Wars ($100rrp). Then they sell it at $90 or whatever.

Keep in mind that while all this is going on, other retailers here are putting the same new product out on the shelf for $78-$88. So you can go and buy a new title for $78, go and trade it to EB for $90 (+10% with the card) and make up to $20 credit.

I often wonder (tin foil hat on) if these are deliberate strategies to be able to order less new stock since
1) they can just sell an "as new" one week old game instead, or even an unopened game
2) to encourage people to buy from other stores and instantly trade it in, giving them more "as new" copies to sell

I'm probably thinking too much though.

That never works in America. 

[Olivia Wilde Homo]

It's been about five months since I last step foot into a GameStop.

Online is where it is at.

[Hollywood]

Its a useless chain. I haven't been to one in a long time. I remember years ago buying a "new" Mario Golf for GBA at their store that had a game save on it. Hopefully they go out of business in this economy.

[bork]

It's one of the reasons I don't go to gamestop very often anymore. I largely don't feel the need to, anymore. Although I will say that I was very pleased that GS were able to come through with my TE stick preorder day and date with SF4.

Same here; the times have really changed.  I do still go there occasionally, but it's only when I can't get the game elsewhere, and I don't buy used from them.  The prices are ridiculous and I *really* dislike how they seem to no longer care if the title has a box or manual.  Worse yet, you can't track this online, so even if a store has a used game in stock you can't find new anymore/easily, it might just be a scratched-up disc. 

There was a Gamestop about 20 minutes away from me that had a PSP game I wanted.  I drove down there and the clerk, too busy hitting on this nasty fat goth chick, couldn't even find the game.   

I'm not too big on the service at places like Best Buy either, but at least everything they have is fucking NEW.  Really miss Japanese game stores; no bullshit whatsoever.

[chronovore]

Yeah, J-games stores are the cats' pyjamas. Unfortunately you probably also remember the selection of J-360 games. Then again, my distinguished tokyo-resident fellows undoubtedly have access to more import shops than I do here in Osaka.

When I get back to the USA (sooooomeday) I'll be using Amazon's S-Shops to bag NEW games, and if they arrive in anything other than NEW condition, it'll be nasty feedback time. Those Z-Shops, they thrive on reputation and volume, and are generally very responsive to customer satisfaction.

[Don Flamenco]

now that I'm on gamefly, I use them for odds and ends.  Like RE5 didn't arrive on Saturday like it was supposed to, so I bought it used at gamestop and I'll return it when the gamefly rental gets here.   

They're also pretty good for buying things to sell on ebay if you know what to get. Only problem with that is that they'll bump prices when they take notice that something sells for more on ebay.

[rubber feathers]

The last time I physically* shopped at GameStop was at least 18 months ago.  I don't buy many games to begin with, and the ones I do want were and can be found at other places for cheaper and/or with giftcards.

I mean, I got Killzone 2 for $52 from Amazon, with $5 for release date delivery, for a total of $57.  It'd cost, what, $65 at Gamestop including tax?  Then there's the whole gas factor.  There's absolutely no reason for me to shop there when I can get better deals online and have them be delivered on release.

*I did buy a year of Gameinformer on their website recently because 1) their game announcements rule and 2) EGM died and I want something gaming related to read.

[Eel O'Brian]

I'm not too big on the service at places like Best Buy either, but at least everything they have is fucking NEW. 

not everything

http://gadgets.boingboing.net/2009/03/05/best-buy-staff-open.html





http://consumerist.com/5077143/best-buy-sells-new-laptop-used-by-employee

http://consumerist.com/5045630/eecb-scores-direct-hit-on-best-buy-after-they-sell-used-phone-as-new

[siamesedreamer]

Gamestop is pretty much the only reason why the wife lets me buy as many games as I do. I trade-in games regularly there to get credit towards new games. I only buy new games there that have been released within the last week and are sealed. If I want a game that was released outside that week window, then I always go to Best Buy or Target to make sure I get a gauranteed new one.

The backlash against Gamestop selling used games that deprive developers from making money is pretty stoopit IMHO. 

[chronovore]

Gamestop is pretty much the only reason why the wife lets me buy as many games as I do. I trade-in games regularly there to get credit towards new games. I only buy new games there that have been released within the last week and are sealed. If I want a game that was released outside that week window, then I always go to Best Buy or Target to make sure I get a gauranteed new one.

The backlash against Gamestop selling used games that deprive developers from making money is pretty stoopit IMHO. 

In what way is it "stoopit"?

I mean, there's no law against it, and they're free to do it. I'm also free to observe and complain that, in fact, when they're selling new and used copies simultaneously but pitch a used copy to any customer who has brought a new retail package to the front desk, they are actively preventing money from getting back to the developer. They might as well HIDE the new copies until they're out of USED ones.

Incidentally, according to a game store employee who "previews" the games, they are able to circumvent the seals. Even with the shrinkwrap/folded plastic sheath and the official Microsoft stickers that cover two or three of the case's sides, they're able to get the ROMs out, play them, and later replace them.