Racketeering Trial of MS and Best Buy Can Proceed

mcgrew (sm62704) writes with news that the Supreme Court has rejected an appeal by Microsoft and a unit of Best Buy to dismiss a lawsuit alleging violation of racketeering laws. This means the class-action complaint can go to trial. The case was filed in civil court and the companies, with the US Chamber of Commerce behind them, wanted the Supreme Court to put the brakes on the expanding use of RICO laws in civil filings. The Racketeer Influenced and Corrupt Organizations Act was designed to fight organized crime, but in recent years more than 100 times as many civil as federal RICO cases have been filed.

Important to note

[ejdmoo]

Just because the summary was so scarce on details: this has nothing to do with computers, OEMS, Windows, or OS bundling. It's not that same old story again.

This is about signing people up for MSN without their permission.

Sounds like stupid college students working at Best Buy getting a monthly prize for signing people up for MSN. Doesn't sound like a giant corporate scam. It also doesn't sound like this involves Microsoft at all. I've read the same story online, but replace Microsoft with Comcast (Cable or HSI) or DirecTV

From the AP article...

The dispute began in 2003, when James Odom sued the companies after purchasing a laptop computer at a Best Buy store. Odom alleged that Best Buy included a software CD with his purchase that provided a six-month free trial to MSN.

Best Buy allegedly signed Odom up an MSN account with the credit card Odom used to pay for the computer. After a six-month free trial ended, Microsoft began charging him for the account, the suit charged.

...

The lawsuit alleges the companies violated RICO by engaging in wire fraud when they electronically transmitted the plaintiffs' financial information. The plaintiffs are claiming damages in the "tens of millions," which if tripled would top $100 million, Girard said.

Microsoft has denied illegal conduct in response to these allegations and a Best Buy spokeswoman says the company does not comment on pending litigation.

Re:Organized crime?

[MichaelKaiserProScri]

The deal between AT&T and Apple sucks, but is legal, because it is disclosed ahead of time. The deal between MS and Best Buy is illegal because it was not disclosed.

Re:Important to note

[ejdmoo]

Replying to my own post, check this post [consumerist.com] from the Consumerist [consumerist.com] out...

I'm almost ashamed to admit this, but it did happen for the longest time. Ever get signed for something at Best Buy, but you swear that you never signed up for anything. Here is the trick that is used, and that I was taught from a Best Buy manager. When a customer would refuse either AOL, MSN, NetZero, magazine offers, or whatever other D-SUB we had, we'd sign you up anyway. You know those Best Buy gift cards that are all over the store? Well those are just American Express cards, with a Best Buy face. So, we'd go through the motions of selecting your address but when it asked for your credit card, we'd swipe through a gift card. Since it was an American Express card in reality, the system took it and you were signed up. The customer had to deal with the late fees because they couldn't charge the credit card the provided. Not our problem.

Re:organized crime

[the_greywolf]

Correction: Banks hold money, which is printed and distributed by the Federal Reserve. Paypal is a financial institution, not a bank, because they do not handle money in the same sense.

I'll sell you a hamburger and secret french fries

[Token_Internet_Girl]

Sounds like stupid college students working at Best Buy getting a monthly prize for signing people up for MSN. Doesn't sound like a giant corporate scam.

Excuse me, but Bullshit. I worked for Best Buy's "Geek Squad" several years ago, they have corporate people directly create the incentive programs so that stupid college students will sign up customers no matter what it takes, for the sole purpose of driving sales. It's a disheartening trend I've seen in several companies I've worked for, including AOL. They know it goes on, they constantly hound their employees to "sell every customer or its your job," and it's finally coming around to bite them in the ass. Huzzah's are in order!

Re:Important to note

[vux984]

I thought gift cards generally were completely useless unless activated, to make stealing them pointless? Is this a recent thing, or are the Best Buy cards not like this, or something?

Yes, they were completely useless, insofar as that nothing can be charged against them. But they still have a number, and a functioning mag-strip. And if the system just requires a mag strip swipe with a valid number. (and by valid, we only mean "properly formatted"), then its good to go.

Nothing is actually ever attempted to be "charged" or "authorized" against the card number until the 6 month trial is up, at which point it doesn't work, of course, because the card is useless.

Re:Organized crime?

[Bacon Bits]

Suing absolutely can be illegal (or, if you prefer, legally actionable). It's known as barratry, abuse of process, vexatious litigation, or frivolous litigation.

If you bring a case against someone solely to punish them with legal proceedings, that's often illegal. Even if it's not, it gets lawyers disbarred.

Speaking from employee experience...

[Trerro]

I made the mistake of working for a Best Buy right after college. I can't comment specifically on the MSN thing, as I didn't see THAT particular scam, but from what I DID see, it would not surprise me in the slightest if employees were trained to at best, be extremely misleading, and at worst, outright lie and cheat the customer out of money.

One common package deal we were supposed to try to push was the 'advanced security setup' or something like that, I can't remember the exact name. The service in theory sounded fine - you sold the customer an AV program and a spyware blocker, explained the point of each, set it up, ran the install, updated definitions, ran windows update for all current security patches, etc - all the standard security precautions. The customer of course would be billed the price of the 2 programs, plus a fee for the service of I think 20 or 30 bucks. Ignoring the fact that Avast (free) is just as effective as Norton, it didn't sound like a terribly unreasonable deal. The user bought software he was probably going to need anyway, and paid a small fee to make sure that the basic security precautions were taken.

There was one slight problem. Best buy is not exactly a place where you build your own custom box. Anything you get from there is going to be a pre-built machine, almost always including some pre-installed software. In nearly every case, that included a copy of an AV program, usually with a 30 or 90 day trial, with a $10-15 subscription fee needed after that - not the 50 bucks you'd pay for a new copy (which of course, also had the fee, just after a year.)

Here's where the scam comes in. The job of the salesman is to inform the user that while yes, your machine will come with AV protection, it'll only last 1 or 3 months, and after that, you won't be covered any more, so you really ought to buy our full protection plan, where you'll have everything done for you.

In case you didn't fill in the blank on that, the job was to convince the customer to pay you to uninstall their already active AV program and replace it with another, charging them for both comparable software (in some cases, THE EXACT SAME PROGRAM) that they already had, and a service that had already been done!

As for the 'there's no commission' argument, that's BS as well. The employee doesn't get commission, but his SUPERVISOR does. So they have you use the fact that YOU aren't on commission (which IS true) as part of your sales pitch.

Also, BB has a very interesting way of making sure all staff participate in these scams. You're on quota. They'll never call it a quota of course - it's a sales goal, a revenue objective, a team target - whatever, they'll call it anything but a quota. When you don't meet the quota, you aren't fired. In fact, there's no penalty at all, other than the expression of disappointment, and strong encouragement to do better as a team. Unfortunately, it seems there's just not enough in the budget this week to cover your department, and everyone's hours need to be cut back. Oh, and if your hours are cut to oh, say... 4 or 8 per week and you can't possibly pay rent, well, if it's a such a problem, you're an at will employee, and hey, nothing is stopping you from quitting. Oh, and if you're thinking of getting a second job, well, you you signed a thing when you were hired that said your available hours would not change in your first X months (3 or 6, I forget), so if you choose to violate that, while, you'll have to fired for that of course.

Funny thing, I don't think they've ever fired someone for not selling enough, they can proudly announce that - and happily do as they sell you stuff, and it's even true!... sort of. As for that absurdly high turnover rate, well, hey, it's retail, and not everyone can stay with it.

I didn't last long there before I quit in disgust at the total disregard for ethics they have.

Is convincing someone to buy software they already own racketeering? Maybe.
Is it outright FRAUD? Yes.

They signed you up for MSN without permission

[Anonymous Coward]

You went in bought a computer and came out with an MSN subscription you didn't ask for and weren't told about, until you noticed the charges on your card in later months.

Re:organized crime

[MeNeXT]

http://en.wikipedia.org/wiki/Fractional-reserve_banking [wikipedia.org]

http://en.wikipedia.org/wiki/Bank [wikipedia.org]

It's just the way it is...

Re:Organized crime?

[plague3106]

Fine, but that's not what the OP said; the OP claimed there was coercion.

OTOH, if you really want to look at it from a coercion angle, do you know what happens if you fail to pay a credit card charge, authorized or not?

Not true; legally, if you dispute the transaction, you are no longer required to pay the charge.

They report it to the credit card companies. The more they report it to the credit card companies, the more 'black' marks on your credit.

No, they don't report it to the credit card companies. Visa and MC don't care. The banks issuing the cards report it to the credit reporting agencies.

Yes, they can report it over and over, too.

No, they cannot. They can update the claim, for example if the amount has increased for whatever reason, but there's only so long since they originally reported it that it will stay on your record. Seven years, I believe.

Ever try to buy a house, or a car with a bad credit rating and no co-signer? It's damn near fscking impossible in this country, let me tell you.

Of course its going to be hard with a bad credit rating. But one card will not stop you; I have one I didn't pay, because the bank changed their terms as soon as I activated the card, and failed to send me anything. Yet I was able to get a mortgage, probably because I hold my accounts and have another card with the lender.

If the charges were illegally posted, he can dispute them, and suffer no adverse affects. Of course he'll have to prove he didn't actually sign up for the trial on his own and enter his own information. It sounds like he did agree to it though and forgot about it.. and now is trying to sue to get out of it.