Friday, April 10, 2009

GameStop's Employee Checkout and Deceptive Trade Practices

Kotaku recently ran a piece noting that the FTC may be interested in the 'employee check out' policy in terms of a deceptive trade practice. The article goes into some detail about the ability of GameStop employees to check out titles from the store on a temporary basis, and in the event these titles are 'new,' then they are brought back in and resold as new. It certainly poses an interesting question: is that a deception to the consumer?

Before talking about substantive law and my take on the issue, I did want to point out one particular clause in the policy, as posted by Kotaku: "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." As I have known quite a few GameStop employees over the years, I know that this part of the policy greatly deters the checking out of new games in favor of used ones. After all, even the slightest inclination that a new game isn't 'new' will more than likely force the employee to buy the game, which many of these employees can't afford. A used game has an expected level of wear and tear, so the bar is much lower for the return to store condition.

So, back to the point at hand: is this a deceptive trade practice? There's both a legal and a pragmatic approach to the answer of this question. From a legal standpoint, ignoring any pragmatic analysis, it certainly seems that way from the letter of the law. Certainly, it's something the FTC could investigate, but more practically, it may be a matter for state deceptive trade practices law. In Texas, for example, it is a deceptive trade practice if you are "representing that goods are original or new if they are deteriorated, reconditioned, reclaimed, used, or secondhand."

Of course, the law does not exist in a vacuum, and from a practical standpoint, I'm not sure what GameStop is doing is as nefarious as some people seem to think. The resale of used goods as new rules had a simple policy argument: when they were implemented, practically all goods had a limited useful life, and any use of them would lessen that useful life. If I re-sold a used console, the console's useful life has diminished. If I re-sold a used TV, that TV's life has diminished. That's not exactly the case with a DVD based media. DVDs do in fact deteriorate, but that's something with a clock that begins from production based on normal biodegrading. If a disk has been properly used in a machine and properly handled, has its life been diminished? I haven't seen any data to suggest that it's anything at all, much less anything significant.

Obviously, if the disk, packaging, or other materials are damaged in any way, or if one-time use download codes are used during the check-out, there is no question that reselling that as new would likely be a deceptive act. Of course, the damages would be relatively minute ($5 or so based on the average new release's used price), which could provide difficulty in generating an actual lawsuit over the issue. However, when the disk is cared for and no damage comes to any aspect of the product, has its value actually been reduced? No, and the content of the product is still 100% present. It's a little more nebulous with respect to DS games, as the last of the cartridge systems. I don't know if they have a useful life as determined by play time or not.

From a practical standpoint, I still don't see why GameStop hasn't moved to reproducing cover art with publisher permission and just re-using empty cases so that no titles have to be opened. Granted, that would basically limit employee check out to used titles, but I'm not sure that's a huge loss to the average employee as many new releases are in short enough supply to prevent check out by the policy as reported by Kotaku anyway. It will certainly be interesting to see if the FTC takes any action on this matter, but from a pragmatic standpoint, I'm not sure they will based on the facts.

[EDIT: I've posted some follow-up commentary here.]

11 comments:

Brandon said...

Recently I purchased a new release from Gamestop (Sonic Ultimate Genesis Collection). Well, the associate grabbed something from a drawer and put the game in the bag. I was busy and didnt get a chance to play that game that night and when I retrieved it out of the bag I expected to have to peel off some shrink wrap and stickers but sure enough, the box was already opened. This confused me until I talked to a fellow employee about it at my work (Best Buy) whose brother works for GameStop. He said employees take new releases, sometimes before they hit the street date, and open new games and play them only to return them to sell as new at the store. This infuriated me and I proceeded to return the game, which the gave me hell for because they also questioned the employee who sold me the game if I was actually telling the truth! Ridiculous. This can't be legal.

pxlt said...

Thanks for posting this, it's useful to hear from a legal perspective.

I have to wonder why it's important (in the context of your column) at all that the product in question might be retain its full usefulness even after it has been opened. That's not what consumers are upset about. I think your average purchaser finds value in the idea that something is sealed and unopened/used from the factory, regardless of whether or not its useful life has been shortened.

'New' has a clearly understood meaning by both parties, and GameStop seems to be getting away with misrepresentation here. I find it hard to believe that even if something is 'cared for' and 100% useful after being opened and handled at an employee's house (or god knows where), the law can't find any distinction between that and a sealed product from the factory.

Finally, while actual damages in individual cases might be trivial, don't you think that millions of possibly fraudulent transactions that are explicitly part of store policy for a multi-billion dollar business is worth investigation or class-action? Cases have been made and won on far less egregious violations and smaller amounts of money.

If you can't tell, I think it's a terrible practice and I'd love to see it stopped. I was hoping the legal side of it was as black-and-white as I figured.

Gilbert said...

As a former GameStop manager, (August 2008), I can tell you that this practice varies from store to store. It basically depends on how strict the particular store manager is. I know in my district, it was about 50/50: some didn't allow check-out of new games, some did. Even in the ones that did, the employee needed to have the item pre-ordered. (Although that has more to do with playing games before street date, rather than just "trying" them)

Be that as it may, nearly every single one of the employees use their employment at a video game retailer to its advantage, some more than others. If its not this particular issue, its swapping out RRoD-ed 360s, or trading an accessory or game a customer forgot in the store as personal store credit. I've known of stores that conveniently forget to tell customers that we trade in the hard drive and console separately for 360s, and pocket the hard drive. We call it "slush" or "sandbagging" depending on the circumstance.

Anyway in my particular store, the policy was about average in my opinion. If inventory permitted, the employees can check out the copies we gut (display copies). We're honest with all of our customers, and because a few customers are concerned about disk condition, we show them the game and if they approve, we seal it and sell it as new. The ONLY reason why we seal it is because of our return policy. We can't determine what happened with the game while it was in your possession, so if the seal is broken, we can't take it. A used game, however, has a much more lenient return policy.

In my opinion, I think the new/used debacle is trivial. People buy games for the experience, and as long as the disk isn't scratched or any other malady that obstructs that experience, complaining over the $5 difference between a new/used game is a little weak. That said, I don't think customers should be deceived, but its on a case by case basis. Some customers don't care, some do. Some actually like that its open because with a little bit of a raised voice they might be able to return a brand new game because it sucked, something we'd all like to do from time to time. I've just never supported the idea that a group of disgruntled people, no matter how large or how disgruntled, should really push a policy change with something they've always had a choice about. If you wanted it new, preorder it, I promise you'll get a sealed copy. If you didn't preorder, or just heard about the game, then ask for a sealed one (we give sealed ones before displays anyway). If all the store has is displays, look at the disk and if you approve, buy it. If you don't, go to a different GameStop or another store all together. Believe me, we won't be offended. The point is, they have options, and always have. No victims here.

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Stan said...

I wholeheartedly agree with pxlt's comment. I'd like to add: once an item has been opened after being factory sealed and played, even once, it is used, period. I recently walked into a GameStop to check out their 'new' games. Every one of them had already been opened. I didn't realize it until I was about to buy a particular game then I realized it was their 'practice' to open all the new, sealed games and still claim they are 'new', even after employees have taken them home and played them already. If this isn't deceptive, I don't know what is. I didn't buy that 'new' game, and walked out. I went to Walmart and got a sealed copy. Once the factory seal has been opened--what you are getting is a 'like new' copy, not a new one. A used game can be just as 'useful' as a new one, but that doen't make it new.

Gilbert's attitude about this practice is disgusting, but not a surprise. It pretty much backs up the whole argument against GameStop in the first place. Selling opened, played games as new is just one of a number of questionable practices going on at GameStop that harm consumers.

I think there are victims here--clearly anyone who's ever bought a supposedly 'new' game from GameStop is one of them. This is clear, should be obvious, and is an extremely deceptive practice.

Thomas said...

Brandon, it is more likely that the game was formerly used as a display representative on the shelf, as multiple copies are "gutted" at a game's release.

Notice that it is STRICT gamestop corporate policy that no emplyee plays any games before the street date or release date. This is a no toleration policy that will result in unquestioned termination.


If your definition of "New" is that your game stll be in shrinkwrap, then GameStop store (all equipped with shrinkwrap machines) could simply shrinkwrap you a used game and hand it right over to you and watch you walk away foolishly smiling. However, that is not the case. In this instance, the disc is removed from the case, places in a sleeve for safekeeping while the case is displayed on the shelf for consumers to see.

All of you people griping so vehemently about this are incredibly shallow. Do you think your "new" car teleported from the factory to the lot? Nope. How about your "new" house? Think it sprung fully-built in your presence for you to be the first to walk into it? How about that fancy "new" computer you just bought? The chances someoen else was on it installing/testing/quality control is pretty high.

Get over it, and stop whining.

Jennifer Van said...

Think of it this way though. The games must come back PERFECT. If they're not perfect you're not getting them. Some times the "opened" one you're buying hasn't been played it's just the gutted copy so they can have something for you to look at on the floor. And lastly, how does it help YOU, the buyer, if you come in and say "How is this game" and the employee can't tell you because they've had no way of playing it?

People getting so worked up is ridiculous. Don't think of it as "used" think of it as tested, because that's all it is.

Hugo said...

Alright, now it might be that I'm just too dumb to get it, or maybe it's some sort of Europe-US brain boggle, but what's the problem?

Whether or not it's deceptive depends very much on how you precisely define "new", of course. To make a clear distinction between "new" and "as new" in an item where there has been no change in the value of the product somehow seems simply unreasonable to me.

From mechanical DVD production to the moment of consumer purchase, a game will be handled by many people in various ways. One of these ways might be 'an employee rocks and rolls out with the disc for a while'.

Of course the argument could be made that when this practice exists, stores should differentiate between 'really new' and "as new" and not sell the latter as the former, but I'd argue that they are both "new" until they are sold to an end consumer, at which they become "used" - but might still be "as new".

However, I cannot identify any basis on which to differentiate between 'factory new' products which are still fully sealed, and 'store new' products which are no longer really "new".

Any of the people who feel Gamestop acts unjustly in their conduct willing to explain the concrete basis for the distinction?

joltzapvire said...

Actually guys GameStop opens a limited number of new release games for a reason. They have to, wanna know why? You've all seen the game cases on the floor... So think about it, why are they empty? Answer: there has to be some kind of case for the customers to look at when considering a purchase. Obviously the games can't be kept in the cases otherwise people -will- steal them. Yes, there are games that aren't in original company packaging but it is virtually impossible to keep games live on the floor.
That employee should have shrink wrapped the case so that it appeared new.
Not every gutted new game has been taken home by an employee.

Caleb said...

I just had to post a comment after reading your blog. I am currently an employee at Gamestop and I have to say that your information is wildly incorrect. I can tell you in all truth, that a Gamestop employee is never allowed to take home a new game. This is against store policy and can result in a employee being fired. Anyone who tells you other wise is full of crap.

Alex said...

As an employee of gamestop i too was surprised to hear about the renting of games. now at my store it is limited to used only and we cant take the last copy of the game home, although i know some stores let u take home new ones. Now you can complain all u want, but the fact of the matter is if u look at the disk and there is no damage to it what is the harm?

Also when it comes to games that arent sealed in plastic wrap, there is a very logical explanation. we need to make wall copies of games. So if we didnt open one up how would u know what games we had. Just because a game is not plastic wrapped does not mean the game isnt new. Gamestop employees are required to put a sticker on any games that arent sealed. The sticker is our way of knowing if the game was opened or not when u try and return it.

Also if you do not like the idea of gamestop employees renting games, then thats your problem. But the fact of the matter is that employees at gamestop probably care more about games than anyone else. if a game is returned damaged or in a condition that is not like new, it will be "defected" out and sent back to the warehouse.

With all this being said. If you dont like the idea of this, you can take your bussiness somewhere else. Where Im sure they do even more shady things with the games