Evan Schuman's StorefrontBacktalk

As the Connecticut Attorney General’s Office continues the probe into possible fraud accusations against the $31 billion retail chain, retailer’s executives concede errors.

As it tries to navigate the minefield that today’s multi-channel retail strategies have become, Best Buy officials are conceding “human error” and employee “confusion” caused customers to be shown a site showing higher brick-and-mortar prices while the customer was incorrectly being told that the displayed site was showing online prices, according to interviews with Best Buy officials.

The confusion stems from two visually-identical sites that Best Buy employees can show customers. The sites have only a handful of minor functionality differences, with the key difference being that the prices are sometimes different, said Chap Achen, director of order management for Best Buy.

This issue has come to haunt the $31 billion retail chain—which owns about 941 stores in the U.S. and Canada—after the Connecticut Attorney General’s office launched an investigation into the chain, trying to establish if employees had deliberately conned customers with the almost-duplicate site.

Best Buy officials, while admitting “human error” among its workers, denies any evil intent and says the false statements apparently made by store employees were a result of confusion and inadequate employee training.

“This is more an issue of process than of deception,” Achen said, defining it more specifically as employees “not realizing” the sites’ differences. “The differences between the two can be improved upon. Our customers and, in this case, an employee was confused about the differences between” the two sites, he said. “The kiosk is reflecting store pricing. We’re absolutely evaluating the option of making it more clear. We feel, if anything, this (Connecticut) investigation has exposed that we can take more concrete steps” to make the site differences more obvious.

The intra-store version is showcased in store kiosks using Internet Explorer and was intended to show customers information about products available in the store, along with their official prices. The problem stems from Best Buy’s price-matching policy, which promises to match the price of other retailers and it explicitly includes Best Buy.com.

The problematic scenario happened when customers saw a low Web price and went into a Best Buy physical location to trigger the pricematch and get that low price. Employees would agree to match the price and would then say they were calling up the Web site to verify the claim. Instead of calling the Web site, though, employees would access a site the intra-store kiosk application, which looked identical (other than its pricing) and then used that to “prove” the online pricing didn’t exist.

Achen said employees have access to both sites and shouldn’t have shown the wrong site and said he believed those instances were accidents, where employees truly believed they were showing the Web site.

Why do the two sites look identical? Achen and Dawn Bryant, who is Best Buy’s corporate public relations manager, said the mirror designs were solely the result of cheapness, not trickiness. The two sites—which Achen said each contained “hundreds of thousands of pages” including “at least 250,000 active product pages”—used the same design because at the time of its launch, there was not seen a need for investing in a different site design.

“Our online kiosk is a virtual copy of the Web site,” Achen said, with just a handful of differences. Some of the differences be cited include: the checkout on the kiosk not requiring an E-mail address (it is required for the Web site’s checkout); pop-up payment forms time out “a little faster” on the kiosk version to make it more difficult for a situation “where another customer could read your credit card number”; and the kiosk version is limited to only view sites owned by Best Buy.

The Best Buy browsing restriction is to prevent customers from using these very publicly-displayed to show pornographic sites or what Best Buy would consider even more obscene: visiting price-comparison sites or the Web sites of competitors. “We’ve got parameters about when we’re linking out to third parties,” Achen said. “We’re only going to link to stuff that we absolutely trust.”

The original purpose of the kiosk was to show inventory and product details and stemmed from a time when Web access was not nearly as common as today.

Achen said Best Buy’s Web site today uses extensive customization, meaning that one customer visiting the site and looking at Widget 1234 might be presented with a lower “overall purchase price” than another customer looking at the identical product at the same time, based on that customer’s buying history and other factors. “That’s the power of personalization,” Achen said. “We’re trying to drive certain categories of business.”

The kiosk was intended to be able to offer various in-store-only incentives—such as financing. This adds up, Achen said, to a very complex multi-channel pricing situation where different Web prices will appear. Sites can also frequently change pricing based on inventory and supplier changes that feed into the system automatically. “On any given day, there are going to be variances in the price. A customer may be complaining when (a brick-and-mortar associate is) showing Web site pricing (instead of in-store pricing) because the Web pricing may be higher at that moment.”

Achen said that employee training was “one component” of the problem. “People lose the context. (Store associates) may be going over to the kiosk once a day” and may not remember which site is which, he said.

“There was obviously some employee error” on “the salesfloor,” Bryant said, “given the complexity where dotcom and brick and mortar come together.”

How do those explanations play with the Connecticut officials who are investigating? State Attorney General Richard Blumenthal said the probe goes on.

“Best Buy’s explanations—apparently multiplying but still murky—seem to raise more questions than they answer,” Blumenthal said, in a written statement Monday night. “We will seek full and complete answers that address the potential consumer rights issues raised by the apparent practice of advertising one price and charging another. All of the facts need to be known before we can conclude our investigation and reach conclusions as to whether violations of law have occurred. We will pursue our investigation vigorously.”

Meanwhile, Best Buy customers have been contacting media to say that their experiences mirror the earlier ones reported, strongly suggesting the site confusion is, at best, widespread. At worst, some customers say, it could be deliberate and misleading if the employees knew what sites they were showing.

“I recently encountered the Best Buy intrastore Web site pricing discrepency. I often research products online, then make my purchase in the store. But I was disheartened when I arrived to find the price higher in the store,” said John Thayer, an applications architect with Quality Bicycle Products in Bloomington, Minn. “I asked a sales associate ‘Can I get the Web price?’ The sales associate said ‘sure’ and we walked to a terminal to look up the price. What they pulled up on their terminal was a Web page showing the price that matched the store price, not what I recalled was the Web price.”

Thayer said that “what troubles me is the misdirection that occurs when looking up the Web price in their stores. How can a customer respond to this price discrepancy without becoming argumentative? I’m sure many people respond with ‘Well, I must have made a mistake’ and just pay the higher price. In order to get the Web price, I ultimately had to return home to make a printout of my version of the Web price.”

Another reader wrote in to say that he also saw what he described as a “bait-and-switch routine at Best Buy with the (intra-store) and Internet versions of their Web site.”

“Last year, I purchased a Sony video camera. As I live an hour from the nearest store, I had researched the price that week,” wrote the Fort Wayne, Indiana, reader. “On the Friday before I purchased it, the price was someplace between $20 to $50 cheaper on the Web site than at the store on Saturday. I asked the salesman about this and he took me to their computer and explained that the sale price had expired and showed me the price on the Web site. I did not know it was their (in-store site) rather than the public Internet site so I purchased it at the store price. When I got home that evening, I checked the Internet price and it was still on sale. I called back to the store and talked to the manager and he refunded me the price difference with a credit on my credit card account. He explained that some of the sales associates didn’t know that they were using the intra-store site rather than the public Internet site. As I got my money back, I didn’t take it any further.”

A Michigan reader wrote in with a similar saga. “Around Christmas, I also found a good deal on the Best Buy’s site: a Canon digital camera for around $269. When I went to the store, the price was $299. When I told an employee about the Internet price, he looked it up on the supposed Best Buy Web site where the $299 price was the only price visible. So I went out and fired up my wireless laptop and went inside the store and showed an employee the lower price, whereupon they gave me the lower price through a complicated exception process.”