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.

Organized crime?

[myowntrueself (607117)]

So how, exactly, is this *not* organized crime?

Re:Organized crime?

[by Anonymous Coward]

A long time ago, prosecutors realized that organized crime tried to use legitimate business faces to sustain and grow itself. When various business interests, controlled by a common hand, unite to box their victim into an alley where they can be persuaded to "donate" their money to a cause also controlled by those same business interests, that's a serious threat to civilization. If each participant could only be prosecuted for disturbing the peace, the mugging would continue unchecked.

The real shame is that private citizens have to leverage civil courts for relief. If their are 100 times as many civil RICO actions as there are criminal RICO actions, it is most likely because prosecutors are not doing their jobs. A mugging is still a crime. Just because it is performed by people in suits doesn't make it less of a crime. And when the suit in the corporate office is orchestrating the systemic muggings of all their customers... it is a crime. An organized crime.

Re:Organized crime?

[Opportunist (166417)]

The IRS gets its cut.

Re:Organized crime?

[MichaelKaiserProScri (691448)]

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:Organized crime?

[Attila Dimedici (1036002)]

The deal between MS and Best Buy was not illegal, unless giving the credit card numbers used to purchase computers at Best Buy to MS was part of it (and then only if not getting customer consent was part of the deal too). The suit is over Best Buy supposedly giving a customers credit card number to MS without informing/getting the customers permission. That is what is illegal. The fact of the deal is what makes the crime subject to RICO. I agree with the Chamber of Commerce that RICO has become overly broad in its application, although I'm not sure which side of the line this particular suit is. On the one hand, the RICO laws were clearly not intended to apply to cases like this (I remember the situations that led to the laws being passed, it had to do with efforts by big time drug dealers to turn drug money into legitimate businesses). On the other hand, without the threat of treble damages, the kind of profit that a big company can make off of most people's inertia is too much for most companies to resist.

Re:Organized crime?

[cayenne8 (626475)]

"The fact of the deal is what makes the crime subject to RICO. I agree with the Chamber of Commerce that RICO has become overly broad in its application, although I'm not sure which side of the line this particular suit is."

Just shows that we need to be VERY careful in what laws are allowed to pass....and that that should be written in a very narrow way.

If not...the Govt. always will start using them in ways they were not meant to be used. This is just one example.

Re:Organized crime?

[Smidge204 (605297)]

So even if we stick solely with your definition, the only difference in their behavior is the use of violence. If you replace the threat of physical violence with a threat of legal and financial ruin, they are virtually identical.

Use violence to coerce people? Organized crime!

Use lawyers to coerce people? Just shrewd business!

I think you watch too many movies, personally. The coercion part is what makes it "organized crime", not the means and methods.
=Smidge=

Re:Organized crime?

[Bacon Bits (926911)]

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.

Well nobody except the entire legal world

[SmallFurryCreature (593017)]

I am afraid you are very very wrong, and you should think a slashdot reader would know better. Copyright infringement is frequently called organized crime, people who make fake products are said to be organized crime, despite the fact that these "criminals" rarely if ever deal with violence.

The only qualifier for organized crime is in the words itself. Organized and crime. Yes the Rico act is meant to deal with more then just a handfull of bruglers and a fence who decide to operate together but make no mistake if you set up a group of people to commit a crime, you are organized and will be called as such by everyone in the legal proffesions except your lawyer.

Think about it like this. Blackmail, what really is the difference between forcing you to give me money through threathening your life or ruining your life to the point that you may commit suicide?

The idea that organized crime is just thugs who go around beating up people for money is just ridiculous. It really just is nothing more then criminals who organize.

Important to note

[ejdmoo (193585)]

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:Important to note

[DustyShadow (691635)]

"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"

I haven't bought much from Best Buy lately but a few years back my roomates and I pitched in for a DirectTV setup and the Best Buy rep was hounding us to sign up for what I believe was AOL. I can't remember exactly what the service was but my point is that he was pushing it really hard to the point that the corporation was most likely hounding him to do it. Even if they aren't pushing it too hard, if they have a bonus system in place and their employees do it, they are still liable for anything their employees do. It doesn't really matter if it's coming the top or not.

Re:Important to note

[ejdmoo (193585)]

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:Important to note

[vux984 (928602)]

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.

i call bullshit on you

[bennini (800479)]

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.

As a previous employee at Circuit City, I can attest that this sort of thing is generally encouraged by store managers. Most of the time employees of these sorts of stores (Best Buy and CC) no longer make commision on sales of extended warranties and the ilk (they did in the past) but they are still strongly pushed to get people to sign up for these crappy deals. Now, you may never be directly told "get X people to sign up each month or you will be fired", but you will definitely notice when your hours get cut or your manager starts breathing down your neck each time you're talking to a customer.

I disagree with your comment about this not being a "giant corporate scam". The top execs at companies like CC and BestBuy are the ones that design, implement and sign the contracts that enable these worthless "offers." They do so strictly because of money and they in turn push their demands down onto regional managers which then breath down the store manager's throats. Its one big chain reaction of pressure to sell what isn't needed and in the end the customer suffers. The employees that push this crap don't give a shit if the person actually needs it or not.

I remember some of my buddies laughing about how they tricked old grandmas into buying all sorts of useless, overpriced peripherals for digital cameras. Their managers loved it cuz it helped them reach their sales target (and in turn get bigger bonuses).
 
Its a huge scam. The companies involved know it, the employees of the companies know it...and finally, now, the customers are starting to know it as well.

ps. i simply installed stereos in peoples cars so i never had to deal with managers' bullshit, thank god..but it was quite sad watching it go down.

Definately organized, definately crime

[Cryophallion (1129715)]

The companies systematically and intentionally look for any advantage, and push the grey area as far as it can go, even into the dark side. Some of this may be "rogue" employees, but their are so many tiers of approval in major companies I find those theories suspect.

I tend to think that if the law fits...

On another note, I'm sure the RIAA was watching this one closely, as they are not looking forward to the RICO suit that was filed against them. Let's hope this is just another decision closer to the destruction of their methods.

Feds can't be bothered to prosecute...

[Shag (3737)]

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.

Well, if the feds can't be bothered to prosecute most things that they should... that's how the numbers end up, right?

Isn't this what we always complain about?

[speaker of the truth (1112181)]

Isn't creating a law with the purpose of using it for one thing (going after commercial pirates) and then using it for something else (going after people who pirate for no money and instead personal uses) something we hate here at slashdot? And yet we have another clear example of it and hail it as if it were the best thing to ever happen, simply by misappropriating the term "organized crime." Isn't that something else we complain about as well (after pirates don't steal, they simply infringe).

I guess the end truly does justify the means. At least here at /.

Re:Isn't this what we always complain about?

[shaitand (626655)]

'Isn't creating a law with the purpose of using it for one thing (going after commercial pirates) and then using it for something else (going after people who pirate for no money and instead personal uses) something we hate here at slashdot?'

First of all this has nothing to do with piracy. Second, the law was designed to go after those who use an organizational structure to pursue crime. It might have been the mob who was in the sights of the government when passing these laws but there are more so called 'legitimate' corporate conspiracies than 'illegitimate' and the 'legitimate' crime syndicates need to be brought to justice just as the organized crime of old.

Although the whole piracy reference was a nice plea to emotion I think you'll find that Slashdotters don't feel those laws are being used inappropriately but instead feel that laws which create a class of users that could be called pirates are bad regardless of how they are applied. Copyright and Patent laws have outlived their usefulness, anything that supports that archaic and obsolete system or its enforcement is bad.

Re:Isn't this what we always complain about?

[PPH (736903)]

RICO was created to go after organizations who engage in patterns of racketeering. The problem with our legal system is that we must enforce laws equally. I think the actual phrase is 'equal protection under the law'.

The problem is that we can't differentiate between the activities of some corporations and the classic Mafia. Unlike the example you posited, basing enforcement on the profit motive, often mainstream corporations derive much more profit from their activities than the Mob ever did. So that's not an effective test.

The problem with defining 'organized crime' is that there is no way to define it to fit our stereotype of a bunch of thugs of a certain ethnic persuasion and have it pass the smell test constitutionally.

Re:Isn't this what we always complain about?

[conteXXt (249905)]

Which, on the surface sounds like a "Beautiful Thing".

If you can't tell the difference between "a bunch of nicely dressed gentlemen of a certain ethnic persuasion"
doing X

and

legal, licensed, nicely dressed (albeit with bad brutally bad haircuts) officers of a public company
doing X

I think that finally affirmative action is working :-)

It really shouldn't matter how bad your haircut is. A crook is a crook!

I'll sell you a hamburger and secret french fries

[Token_Internet_Girl (1131287)]

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!

No comment?

[ealar dlanvuli (523604)]

"Microsoft does not comment about pending litigation?"

This means Balmer's linux patent threats contain no litigation that is pending?

Speaking from employee experience...

[Trerro (711448)]

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 caught ne with this one

[aegl (1041528)]

I bought a 19" LCD monitor from Best Buy while they were running this scam and they signed me up for msn.com just the way the article says. No disclosure to me beyond telling me that there was a free 6 month subscription CD in the box. I recycled the CD as I had no interest in the MSN subscription. Six months later the first monthly charge appeared on my credit card bill.

I called MSN and asked what was going on. They said that I'd signed up at Best Buy. I said "oh no I didn't". After a couple of iterations of this the guy on the phone agreed to cancel the subscription and refund my money.

Assuming the lawyers take $30M of the $100M judgement, and assuming that there were 100,000 customers (complete random guess ... the article only says "thousands of customers"), then my share ought to be $700. That would actually be quite cool. But I bet that I'll just end up with a $10 coupon good for discounts on Microsoft Vista :-(

Re:organized crime

[the_greywolf (311406)]

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.