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Class Action Suit Accuses GameStop Of Deceptive Used Game Practices
Class Action Suit Accuses GameStop Of Deceptive Used Game Practices
March 26, 2010 | By Kris Graft

March 26, 2010 | By Kris Graft
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California resident James Collins on Tuesday filed a class action lawsuit against major U.S. video game retailer GameStop, alleging "deceptive and misleading practices" pertaining to the company's used video game sales.

Collins' complaint, obtained by Gamasutra and originally uncovered by IGN, said used titles sold at GameStop and GameStop.com, such as Dragon Age, Battlefield: Bad Company 2, Mass Effect 2 and Gears of War 2: Game of the Year Edition, have packaging that says free downloadable content is included.

This free content is obtained with a one-time-use download code, which is entered into a digital storefront such as Xbox Live. However, after that code is used by a games' original owner, the code expires, and the content is only then available by paying an extra fee.

The problem, according to Collins' complaint, is that GameStop allegedly deceives consumers by not making clear that the content is not included for free with a used game. "In short, as a result of GameStop's deceptive and misleading practices, consumers who purchase used games from GameStop unknowingly find that they must pay an additional fee to access the full game they thought they purchased," the complaint said.

Game publishers do not see any revenues from used game sales -- used game retailers are the only parties that benefit directly from preowned sales. However in recent years, game publishers have tried to create incentive for buying games brand new by including one-time use codes that can be used to download content such as extra levels, maps or weapons in games. Without a free download code, the content can cost around an extra $10-$15.

"GameStop tricks consumers into paying more for a used game than they would if they purchased the same game and content new," said the complaint. The plaintiff is seeking an amount in excess of $5 million on behalf of the class, the filing said. The plaintiff is also demanding that GameStop "correct" the advertising on used games and provide legal fees to the plaintiff.

Chris Olivera, VP of corporate communications and public affairs at GameStop told Gamasutra that the company is aware of the lawsuit, but does not comment on impending legal actions.

GameStop's used games business is lucrative. While used product sales make up around 20 percent of the company's revenue, around half of the retailer's gross profits come from used product sales. Where gross profit margins for new games is about 20 percent, it's 50 percent for used titles. Total annual revenue from used game sales at GameStop is reportedly $2 billion.

According to the filing, the complaint was prompted when Collins purchased a used copy of Electronic Arts' Dragon Age in January for $55, or $5 less than the new price, and realized a week after the seven-day return policy expired that the download code advertised on the box for free content was already used. The content normally costs $15.

"As a result of GameStop's concealment, plaintiff ultimately paid $10 more to purchase a used game than he would have had he purchased a brand new copy of the exact same game," the filing said.

Analyst Arvind Bhatia with Stern Agee said, "While we are clearly not legal experts, it does not seem to us this lawsuit will be material. ... It seems to us if this is an issue of making sure the used games customer is fully informed, it should be easily fixable with some sort of label that [GameStop] can put on the used copy that fully explains the situation."


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