Tuesday, June 26, 2007

Of Warranties and Consumer Protection: An Xbox 360 Story

Last evening, my second Xbox 360 died, approximately 7 months after it arrived. I had a launch console, which died about 8 months ago, and was replaced by the recently deceased refurbished console. I know what you are thinking, "Join the club." Or "Yep, and it seems Microsoft is never going to tell you why."

However, Law of the Game is a site about video game law, and while my second dead Xbox 360 may seem like it has nothing to do with the law portion of that description, it works as an interesting lead in to a short post on the law of warranty and the concept of consumer protection.

The concept of a warranty is simple enough: Someone selling a product assures the buyer that of something. In a typical consumer transaction, the assurance is generally that the product will work for some period of time or is free from defect. Warranties can be express (written) or implied (imposed by law on all sales). Express warranties must be available to the consumer pre-sale, according to the Magnuson-Moss Act of 1975, a Federal Law. The FTC has a fairly complete consumer guide for written warranties.

We all know what the Xbox 360 warranty says, it's right here and here. It is the second variety of warranties that are more complex, the implied warranties. Implied warranties are imposed by law, and vary from state to state in the US and country to country abroad. As a result, I could spend the next year just trying to lay out the complex worldwide warranty matrix and still not finish the task. So, instead I will briefly mention two major forms of implied warranties: Merchantability and Fitness for a Particular Purpose.

Merchantability implies that the goods are what they say they are, and they conform to the standards of trade for that item so that they can be used as expected for that item. So, when sold, an Xbox 360 is warranted to be working, packaged and assembled in a uniform way, and able to play Xbox 360 games and DVD movies.

Fitness for a Particular Purpose is more specific. A merchant in this case must know that the consumer is planning to use the item for something specific and tells the consumer that the items are fit for that purpose. Say I went into a furniture store asking for a table to support a very heavy (200+ pound) TV set. If the salesman told me that a particular table would work, and it in fact collapsed, there would be a violation of the warranty.

Neither of these implied warranties are of much use, unless your system is dead out of the box. Moreover, they typically apply to the merchant (the place you bought the item), not the manufacturer.

A related issue is the concept of a deceptive trade practices acts. Deceptive trade practices are pretty much what they sound like (an action that in some way deceives the consumer about the product), and they are also a state by state action. In fact, some states have a long list of industry specific violations in addition to the general violations. It would be a bit of a stretch to apply this as well, although some concept of a failure of represented quality might be applicable, although Microsoft has generally admitted Xbox 360 failures, which may preclude this option.

There are probably potential other causes of action related to the Xbox 360 failures, but these are the ones that seem to appear on the message boards the most.

I would also like to take a moment to point out another legal issue related to the Xbox 360 failures: Fraud. Going to Wal-Mart (or other retail store), purchasing a console, and then returning your broken console is fraud. While it may seem like an easy fix, just don't do it.

Microsoft has encountered an interesting problem with the 360. The failure rate is high, but so are sales. What is a gamer to do? Hunt for weeks, if not months, to get a Wii, which I admit I enjoy thoroughly but is a little short on software until some of the big releases later this year (Metroid Prime 3, Smash Bros. Brawl, Mario Galaxy). Buy a PS3, which is even more expensive than the 360 and has, for the time being, a weak software lineup. Or buy a 360 and play some quality games until it fails, which seems a near certainty, at which point you might be under warranty, might have to pay for a repair, or might just buy a new console. It's quite an odd problem, and one I certainly wish Microsoft would resolve. Unfortunately, sales don't seem to be suffering enough for Microsoft to really take notice. Not that I blame the consumer, since I'm just as hooked as most everyone else. This issue, though, is also one that I cannot remember happening to this degree with any other console. In fact, I have never had another console in my collection fail, including my launch PS2 (which did have a notable failure rate).

What is a consumer to do? Unfortunately, short of a product recall (which seems unlikely given that it has not happened yet and safety is not the issue) or a class action suit, the individual consumer is likely stuck. Why? The cost of an action against Microsoft would be astronomical, and more than likely, they will just settle before any court could place any actual fault on them in order to avoid future, similar suits. This speaks to the failure of consumer protection on the whole. The Xbox 360 user base is vocal and adept at using the internet, so this issue is well known and widespread. Who knows what other products may present the same result to a less technically savvy group. On the flip side, I am certain that other products that work well are being unduly burdened by consumer protection attempts. It probably balances out in the grand scheme of things, but is unfortunate in many particular instances.

And so I, like everyone else, will be once again calling 1-800-4-MY-XBOX and hoping for the best. At least this time, it is in the off season, rather than right before a major game release (my last console was being repaired during the Gears of War release).

4 comments:

Rob Jellinghaus said...

What would be the likelihood that a class action suit would achieve some kind of major settlement against Microsoft?

It seems pretty clear that the problem is widespread enough for a class action to be taken, especially once warranties start to expire and thousands of XBoxers start having to spend more of their own money to fix their failing boxes.

But your feeling is that such a class action would be really expensive, and would be unlikely to lead to a settlement that would actually deliver much consumer relief?

FunkyJ said...

Merchantability implies that the goods are what they say they are, and they conform to the standards of trade for that item so that they can be used as expected for that item

In Australia, this may be used against MS with the Xbox360. The example given in the numerous consumer guides is that if you spend $2,000 on a TV, you should expect it to last longer than a year.

It is the same with the Xbox360. Considering the original Xbox, the Game Cube and PS2 never had these kind of issues even after several years of being on the market, and the PS3 and Wii don't have nearly the same level of issues, the case can clearly be made that the Xbox360 isn't of merchantable quality.

white devil said...

Not only is it xbox 360 now but its also zune teaming up to protect the xbox 360 group it seems to me. I had zune and was trying to start a class action agenst microsoft 360 group and still am dieing to follow thrue with it but as you have sead, the cost would be astronomical, but a serious win for gamers everywear if successfull. Zune not only ripped me off for a month of service after i canceled but tryed to get me to agree to microsoft xbox 360's new and updated terms of service agreement, thusly trying to make it so i cannot sue them. of course i refused and told off the zune people, i am still furious about all this because i paid well over $1,000.00 for the xbox 360, games and all the equipment for it and i feel strongly robbed, i want justice badly!!! I hate them and will never do buisness with microsoft again. They are truely crooks. i have been contacting lawyers on the matter for about 5 months not, i contacted over 40 different ones with only one reply. Still i will NEVER give up. I happen to know the c.p.u. fryed/overheated because of a simple programming error and it allows too much information to pass thrue the c.p.u. from off the c.d.'s and this simply put, has been the wisde spread issue we have all been having, so the proof is actualy in my house right now for this waiting for a ligitamit class action to be started, and i look verry forward to pursuing it cheerfully. So then why should i have to pay $100.00 for a problem that microsoft caused and fix there mistake???? Its the princapal people, not the money. I am all for a lawsuit and feel if anoff people pull together about this issue it can and will be done. My email address is; mikewhite16335@hotmail.com if anyone is serious about this, and it seems you are. good luck and best wishes.

white devil said...

Not only is it xbox 360 now but its also zune teaming up to protect the xbox 360 group it seems to me. I had zune and was trying to start a class action agenst microsoft 360 group and still am dieing to follow thrue with it but as you have sead, the cost would be astronomical, but a serious win for gamers everywear if successfull. Zune not only ripped me off for a month of service after i canceled but tryed to get me to agree to microsoft xbox 360's new and updated terms of service agreement, thusly trying to make it so i cannot sue them. of course i refused and told off the zune people, i am still furious about all this because i paid well over $1,000.00 for the xbox 360, games and all the equipment for it and i feel strongly robbed, i want justice badly!!! I hate them and will never do buisness with microsoft again. They are truely crooks. i have been contacting lawyers on the matter for about 5 months not, i contacted over 40 different ones with only one reply. Still i will NEVER give up. I happen to know the c.p.u. fryed/overheated because of a simple programming error and it allows too much information to pass thrue the c.p.u. from off the c.d.'s and this simply put, has been the wisde spread issue we have all been having, so the proof is actualy in my house right now for this waiting for a ligitamit class action to be started, and i look verry forward to pursuing it cheerfully. So then why should i have to pay $100.00 for a problem that microsoft caused and fix there mistake???? Its the princapal people, not the money. I am all for a lawsuit and feel if anoff people pull together about this issue it can and will be done. My email address is; mikewhite16335@hotmail.com if anyone is serious about this, and it seems you are. good luck and best wishes.