NY Attorney General Subpoenas GameStop

February 5, 2010 -

Ever bought something online from a reputable dealer and then unexpectedly find yourself hit with fees, account charges and bills for programs you never knew you'd signed up for?

According to New York State Attorney General Andrew Cuomo, GameStop may be one of the culprits.  The AG's office has subpoenaed GameStop and 21 other online merchants over their relationships with so-called membership discount clubs such as Webloyalty, Affinion/Trilegiant, and Vertrue. The AG's office believes that GameStop and the others have been "tricking customers into accepting offers from third party vendors, which then siphon money from consumers’ accounts." Because of the relatively low dollar amount of the charges, the fees may go unnoticed for some time.

The names of the companies involved read like a laundry list of e-commerce: Barnes and Nobles, Expedia, Pizza Hut, Staples.com, Travelocity, Classmates.com, etc.  According to Cuomo, the three discount clubs under investigation bring in a combined $1+ billion per year, much of which Cuomo believes is fraudulent.

According to University of Minnesota Law Professor Prentiss Cox (via MSNBC):

Retailers that sell their customers’ account information so that the customer can be charged for a membership club by stealth should know that they are participating in a marketplace scam. Data from public enforcement actions over the last ten years and from the recent U.S. Senate Commerce Committee investigation suggest that the number of consumers who know they are club members and know they are paying for this purported privilege range between about 0 percent and 5 percent.

 

Every retailer and bank should be held responsible for selling their customers’ account information to other companies, especially when the deceptive results of this arrangement are so obvious.

Gamestop's VP Chris Olivera confirmed that the company had been subpoenaed, and was intending to cooperate with the AG's office.


Dan Rosenthal is a legal analyst for the games industry.


Comments

Re: NY Attorney General Subpoenas GameStop

This sounds a lot like my favorite scam run on newspapers and internet; Secret Shopper scams!  You call them, pay them a fee, and then get charged a lot more two months down the road.  By the way, that low low introductory fee is a one time only thing, so after 2.95 the first two weeks, you're up to 25.00 for the next month.  Oh, and once they sign up for secret shopper, they get signed up for other 'offers' or 'services' without their permission, and charged by those groups too!

Re: NY Attorney General Subpoenas GameStop

Any word if Zynga is on their list as well?

On my last job, I took customer service calls for them in billing.  Quite a few of the people who called fell into three or four distinct categories: 1) Those who were charged that had never, ever played a Zynga game, let alone used Facebook or Myspace, 2) Those who were charged and did play, yet never spent a dime, 3) Technical support calls (Even though we had a live line for billing, there was no such line for tech support.  Go figure.) and 4) Those who played the poker games and reported that their chips had been stolen (I never understood this one.  Why would someone try to steal poker chips for a game that you wouldn't win any real money playing?)

Some of those who paid for points through the third party companies said they never got them.  Since our call center was an outside contractor, we had no direct line to Zynga's SF main office and the supervisors we had were barely qualified to handle the tough questions that many of these customers asked.  As such, we pretty much had to give our own explanations based on what information we had.  I would say that Zynga had little to no supervision over these third party companies and I advocated a caveat emptor approach when dealing with them.  What Cuomo would suggest here, if Zynga is indeed named (and thus could give the class-action lawsuit more traction) is that Zynga was more aware of these transactions than they let on and simply let them happen.  If it is true, then they could be in real serious trouble.

Re: NY Attorney General Subpoenas GameStop

Zynga should be on the list. Talk about a scam company.

Re: NY Attorney General Subpoenas GameStop

Zynga was not on the list. The full list is on the AG's press release (linked in the original article) but for reference:

 

Barnes & Noble, Orbitz.com, Buy.com, Ticketmaster.com, MovieTickets.com, FTD.com, Shutterfly.com, 1-800Flowers.com, Avon.com, Budget, Staples.com, Priceline.com, GMAC Mortgage, Classmates.com, Travelocity, Vistaprint, Intelius, Hotwire.com, Expedia/Hotels.com, Columbia House, Pizza Hut and Gamestop/EB Games.

And of course, the 3 discount clubs actually involved.

-- Dan Rosenthal

-- Dan Rosenthal

Re: NY Attorney General Subpoenas GameStop

If these companies are indeed selling their customer's credit card information so the customer can be charged, that's a pretty serious offense. However, I believe the AG is making statements that could be interpreted that way in order to bolster his position.

I frequently buy on-line and get the offer to "receive $10 off the order you just placed by trying our club." Often I will take them up on it, but I always read the fine print. You are usually given 30 days to try it out, so I set a reminder on my calendar to call and cancel in 21 days.

And if it's true that, "Because of the relatively low dollar amount of the charges, the fees may go unnoticed for some time.", then people need to start checking their credit card statements more carefully.

I don't deny that some of these come-ons are a little sneaky, and that should absolutely stop, but if someone is being charged for a membership in one of these things for months without them noticing it, then that person needs to take a little responsibility for managing their finances better.

Re: NY Attorney General Subpoenas GameStop

I think the thing that takes it a bit beyond 'sneaky' is generally as long as you do not give a company your bank or credit card information they can not charge you thus people tend to see the 'input your credit card information here' as the big signal 'this costs you money'.

In this case they are having the credit card data passed to them via the click through, thus they are able to complete a transaction using that stale data from a differnt company.

 
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