Federal Judge Asked To Halt Best Buy’s Price-Match Program
Written by Evan SchumanPapers were filed in federal court Tuesday (April 13) asking that Best Buy be ordered to halt its price-match policy—or at least not mention it to customers and remove all references from signs and ads in all channels—because the chain is accused of repeatedly defrauding customers by luring them in with price-match and then denying legitimate price matches.
Subpoenaed documents “clearly establish that Best Buy’s deceptive practice is continuing and rampant. Aggressive marketing of the public Price Match Policy without revealing the anti-price-match dictates that [Best Buy] has imposed on its managers and employees results in irreparable harm to consumers,” Attorney Gary Graifman wrote in the federal brief.
Best Buy has yet to reply to the filing and it’s unlikely that U.S. District Court Judge Colleen McMahon would issue such an order, given other less invasive options, including simply letting the case play out. Still, it’s an unusual request. We have here a consumer rights lawsuit that, ironically, is asking that a price-match program be effectively shut down.
Plaintiff attorneys are arguing that the order is needed to prevent more consumers from being defrauded. Best Buy’s position has been that the proven fraud examples are isolated and that the program, by and large, is honestly executed.
Last week, Forrester issued a report stressing the importance of retail price-match programs. Indeed, the existence of such programs has all but eliminated, Forrester wrote, consumer objections to online-offline price differences. Well, that and a big heap of consumer apathy.
Documents surrendered by Best Buy during legal discovery established what all retailers already know, namely that pricematch programs can erode profit margins while simultaneously boosting other sales and that managers and employees can get carried away with efforts to dissuade lawful uses of the program. The question has been: Are such frauds coordinated and even orchestrated by senior Best Buy management or is it merely the work of a few errant workers and managers?
Depending on what the judge does, the lawsuit could have implications for other retail price-match programs.
-Marc
April 20th, 2010 at 11:39 am
As a former employee of Best Buy with a 12 year tenure, I can confidently say that this negative publicity is a result of the work of a few errant workers and managers. I say this even while I am now working for a brick and mortar competitor…
The price match policy was always implemented consistently and ethically at my store. The policy was to match to brick and mortar stores and their corresponding websites. From my understanding, it is the policy to price match only if the competitor has the item in stock – thereby rewarding the customer for choosing Best Buy as their electronics supplier. Aside from Sam’s Club, I never had an incident where the item was not price-matched. (Sam’s club has a membership fee, and therefore price-matching is not comparing apples-to-apples) Nearly all price-matching transactions had to be approved by a manager.
In regards to web price-matching:
Of course, people always marched in with a piece of paper with prices from various websites. These price matching requests were outside of the store’s guidelines (from my understanding) and were taken on a case by case basis. The manager would usually check the cost (to Best Buy) of the item to verify that Best Buy would not be losing money by selling the item at the discounted rate. If the sale of the item did not result in a loss, it was usually price-matched.
Many companies choose to lose money on items (loss leaders) in order to drive traffic to their stores. However, these items are chosen by the retailers- strategically.
In my opinion, companies should not be required to sell an item at a loss because a web-competitor has it cheaper (and the web-competitor likely has a different pricing agreement with the vendor based on volume, etc).
Web price-matching is a slippery slope because the in-stock status of items are seldom verifiable, shipping costs, tax rates, and return policies are, many times, drastically different.