Legal Niches

NY Attorney General Subpoenas GameStop

By pete_gallagher

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.

Full post as published by GamePolitics.com on February 05, 2010 (boomark / email).