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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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    38 comments
More: Console/PC



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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Comments


Alex Covic
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I don't know about Californian laws, but the same case in Germany (where I reside) would demand the plaintiff to prove that this was not a one time incident by one employee or a single GameStop shop, but rather a practice across all shops, demanded by the upper management.



I rely on you guys to straighten this out. Would love to see GameStop stopped, like you do.

Michael Will
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Sounds like a legitimate and winnable lawsuit to me. I have no love for the Gamestops of the world so I wish the plaintiff luck.



A slight aside, but I feel that the relationship between game retailers and publishers should be akin to that of movie theaters and the studios. Movie theaters don't make money off a new release for the first two weeks that a movie's in theaters, all that money goes straight to the studios. Retailers shouldn't be allowed to sell a used copy of a game until at least two weeks past the games debut in stores. It wouldn't fix the major issue of publishers not getting a piece of the used market but it gives them an opportunity to sell their games at the peek of consumer demand without having to compete against slightly cheaper versions of the game that yields no profit for them at all.

adam anthony
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I didn't know the publishers don't get anything from a used game. From now on I will only buy new, im tired of seeing gamestops wallet getting fatter and fatter, ya dig?

Joshua Pfeiffer
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The amount (5 Million) this guy is asking for seems a little extreme, and highly unlikely. I mean it isn't like he is suing for malpractice, or to pay off the costs of an accident. He spent ten extra dollars on entertainment. Give the guy some year long discount on all future new and used purchases or something.

Prash Nelson-Smythe
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$5 million, hah. Some people have no shame. Why are Gamestop responsible for making sure informing customers of the ins and outs of DLC? It is the publishers that have introduced complications to an old and well understood sale model. Also, there may well be people out there who are would rather pay $5 less and not get the DLC, like all those bloggers constantly complaining they don't have time to finish their games. Retailers are a convenient scapegoat for an industry producing increasingly expensive games that people don't want to keep.

sam darley
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Well those people can pay $5 less, no problem. If, however, the game is labelled as having that content freely available when it is not, it's false advertising on GameStop's part. Yes consumer ignorance can be a factor, but there comes a point where the vendor's just not allowed to mislead you about what you're buying.

E Zachary Knight
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@Sam,



Gamestop didn't put the labeling there, so why is it their fault that it is there? That labeling is all done by the publisher. It should fall on the publisher to make sure that the customer is informed that the content is one time use only.

Prash Nelson-Smythe
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OK after reading the source article I've learnt that the "deception" in this case amounts to not altering the game box to reflect the *publisher's rule* that only the first buyer receives free DLC. It seems to be more of a passive rather than an active deception and I agree that they should be made to indicate that the DLC is not available or that the copy is pre-owned.



Ultimately, I think the publisher is responsible for the misunderstanding but Gamestop are in a better position to resolve it.

Joe Lagomarsino
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I'm no legal expert but the article says "$5 million on behalf of the class" which I'm pretty sure means that 5 million is to be distributed among all gamestop customers who bought a used game under similar circumstances. If everyone claimed money I'd say 5 million is probably not enough.

Prash Nelson-Smythe
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Ah, fair play then. The only question that remains then is who is to blame.

Adam Miller
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Regarding Alex's point, Gamestop does not place labels on used games informing the consumer that the used copy will lack the downloadable content. Their only defense would be that they rely on their employees to inform the customer personally. This would require keeping a database of which games have one-time downloadable content and having a strict employee policy -- neither of which they have, obviously, and I doubt Gamestop would fabricate something like that (they aren't that sinister, and inevitably some disgruntled employees would testify against them).



Regarding Joshua's point, it's a class action lawsuit -- he's not asking for 5 million personally, but for all people suckered into buying the used games. Very few used games have one-time downloadable content, so 5 million sounds about right for every customer who's every purchased one of those titles.



Regarding used game sales in general, while I'm all for consumer freedom, there is something a bit odd about reselling something that in no way loses value for being pre-owned. The game itself doesn't degrade after a play-through, after all. Then again, this will all be a non-issue when developers convert to entirely digital distribution. Gamestop's days are numbered (I don't say that maliciously -- I just don't see how they will survive without used game sales).

Joshua Stein
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The $5 million is a bluff figure both parties may settle for something much less. However, the real issue here is GameStop is the only video game retailer in the US. I find it hard to believe that in an industry as large as the gaming industry this monopoly has went virtually unchecked.

Prash Nelson-Smythe
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Hi Adam,



"Then again, this will all be a non-issue when developers convert to entirely digital distribution."



I would personally rephrase this to: "Then again, this may all be a non-issue if customers choose to convert to entirely online distribution."

Joshua McDonald
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@Ephraim/Prash:



I would say it's completely Gamestop's responsibility. If I sell a used DS in its original packaging, but it's missing its charger, I can't point to the box and say "Look, Nintendo says it comes with a charger. It's their fault that their package doesn't represent the item that I'm selling." It's my responsibility to accurately represent the item that I'm selling.



@Michael Will

The publishers' relationship with Gamestop is voluntary for both parties. There are tons of other places for people to buy video games (Best Buy, Wal-Mart, Toys R Us, numerous smaller game retailers, online), so neither is absolutely dependent on the other for survival (unless the publishers abandoned Gamestop in mass). If publishers start deciding that Gamestop is a leech on the industry instead of a boon, they'll quit signing contracts with them. Until that happens, we can assume that Gamestop, all things considered, is still beneficial to publishers.

Josh Green
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@Prash: When the console manufacturers convert to entirely digital distribution, it won't be the consumer's choice. It's highly likely the next generation portable systems from Sony and Nintendo are going to use only digital distribution.

Livingston Datkowitz
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@Ephriam



It not the publisher's fault. Games aren't packaged to be sold used. Period. Gamestop provides a trade in service. If their service makes the labels false, its their job to tell the people buying their used copies that the code is invalid.

sam darley
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Yeah, I misread it as saying that Gamestop are labelling the packaging to say the content is still there, which would be completely out of order. As it stands, it's still deceptive to the buyer if the box on the shelf is listing contents that aren't there. Gamestop should still be held responsible as the reseller.

Steven Lindsay
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Very presumptious of the buyer of a used game that they are going to get DLC. You want DLC, buy new! I do. You used buyer, don't.

Joshua Pfeiffer
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@Adam:



Ahhh yes that does make a lot more sense. Thanks for clarifying that.

Prash Nelson-Smythe
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@Josh:



IF the customers do not want to go all online distribution, then the first company to force them to will lose out on a lot of sales. Publishers that think that they tell customers what to want will lose revenue and die out. It appears that a lot of people still want retail.



And I can guarantee you that the next handhelds from both Sony and Nintendo will not be online distribution only. I would put a lot of money on it too.

Jesse Tucker
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Just like McDonalds has to put a warning label on their coffee saying "Caution! Contents may be extremely hot." Gamestop should have a label on their used games saying "Notice: Redeemable content associated with used games may no longer be valid." or something to that effect.

Kevin Laird
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As for the statement that it is the publisher's responsibility to modify the packaging to inform the consumer, I can confidently say that any normal-sized text like "Free content only available to purchasers of new game copy" would really get under GameStop's skin.



So maybe they should indeed put a warning like that, just because GameStop seems to need a smack to the face anyway.

Maurício Gomes
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First, again I say: If you people hate gamestop that much, please, let them know that they are welcome down here...



Then I also say: Sueing Gamestop for a publisher ridiculous idea that is actually copyright infrigment, is in my point of view ridiculous, but currently the US (both citizens, companies and government) behavior toward copyright is each time more over the top ridiculous and hilarious, this lawsuit is not a surprise.

Tom Newman
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A good example is I bought the Saboteur used from Gamestop, and didn't get the nude dlc. I was upset, but didn't blame it on Gamestop, as GAMESTOP LETS YOU RETURN ANY USED GAMES WITHIN 7 DAYS FOR A FULL REFUND CREDIT no questions asked, so I took it back and bought something else.



I blame the publisher more than the store, but I fully knew I was buying a used game. Publishers are doing this to encourage people to buy a new copy, Gamestop has nothing to do with that.

Jeremy Reaban
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Oh yeah, digital distribution only has worked out so well for the PSPGo.



I think it shows that consumers are not willing to pay full price for games that are digital only. Maybe 99 cents - 9.99 games on the iPhone, but any digital download only system or console that has $40-60 games is likely going to flop.



Unless all of them decide to do it, and the you might see collusion lawsuits.

Tom Newman
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At least in Michigan, Gamestop puts their used games in a different section with neon yellow price tags that say in bold letters on top USED, as oppossed to the shrinkwrapped games with the white price tags. You have to be a complete and aboslute moron not to know the game is used.



I have no bias towards or against Gamestop, but the suit is rediculous.

Rodolfo Camarena
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The same thing could be said about ANYTHING that is resold, be CD's, stereo equipment, and did everyone forget... cars. Do the manufacturers see anything from resold vehicles? No, they don't. Also, I'm sure if you read the game manual in the back where it mentions the Software License Agreement, you'll see that everything is pretty much licensed and warranted ONLY to the original consumer purchaser.



I do agree about the marketing and advertising aspect of the complaint. GameStop advertises new games for xx amount with the trade of selected qualified games which isn't a bad deal when you consider the trade in credit for certain games, however they fail to inform you that you'll be paying the tax on the full retail price vice the new 'lower' price because of your trade it. The game will get discounted down the xx amount, but you pay full taxes. I remember an incident with a fellow customer when GameStop had the trade in your DS towards a DS lite promotion and get instead of paying $129.99, you'll pay $79.99. So after the trade, he is informed of the difference which was not remotely close to $79.99 because he was paying the tax on $129.99 and not $79.99 and he was like... "hold on, tax is 8.25% and it should be xx amount..." They tried explaining to him that the trade advertised actually meant that he was paying $79.99, only that after the credit, it'd appear that way and he'd still be charged for the $129.99 tax. This was at the time where it was new and these systems were a little hard to come by and I think it was suppose to be a gift for his daughter and he made such a huge scene... He took back his DS and was like, you guys need to fix this and that it was against the law to be taxed on etc... and went on and on... then said there is going to be a really upset girl when he gets home because they effed up and stormed out... < this was in a Southern California GameStop by the way... anyway



Publishers have been sending different 'batches' of newly released games to tackle the DLC issue. To help increase new sales, they try to advertise, buy new/reserve your copy to get 'DLC' content and it is usually exclusive only to GameStop retailers, then the next wave would not have it advertised on the cover.



Personally, as a consumer, I make sure that I'm fully aware at what I'm buying and ask questions if its a used game. I don't see this going anyway, really. Just an easy fix in my opinion and they'll probably send down a letter/email about training their employees better on the resell of used games containing DLC. There has been many lawsuit filed against GameStop and with this one, I don't see it going anywhere because of the 'fine print' that is provided in the user game manual.

steve roger
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Come on you guys complaining about the damages that are asked for in the lawsuit, he isn't asking for 5 million for himself for one game he bought. He is asking for 5 million for the "class" of plantiffs. That is plaintiffs plural. If the class action is certified and there is a judgment or settlement the 5 million (or whatever number is agreed on or ordered) will be split among all the plaintiffs--those that didn't opt out. The individual award is chump change. The people who win big is the lawyers who get a big chunk for filing and litigating the thing. And it isn't cheap to litigate a class action lawsuit. There are millions of potential plaintiffs and the cost of just giving them notice is enormous.

Adam Piotuch
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Just buy new.

Terry Matthes
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This just seems like a ridiculous thing to sue over. It seems to me like someone is trying to make a fast dollar.



I don't know why the game industry thinks it deserves to make money off of used games. Just because it is a big market that is making some decent money doesn't mean you have some legal right to tap it. If you want the money so much why don't you open up a store?

Altug Isigan
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I think the valid point that the guy has is that he had to pay more money in total to get the online content than he would have spent had he bought the original game. That must have really upset him :)

Adam Bishop
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Gamestop is knowingly selling a product that lacks some of the content indicated on the packaging. This seems like a pretty clear-cut case to me, and I expect we'll see some sort of label/sticker on these sorts of games when they're sold used pretty soon.

Terry Matthes
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Whatever happened to consumer responsibility?

Jonathan Osment
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Whether you agree or not, or, choose to use silly comparisons with other products which the consumer can actually own rather than license, keep in mind the used game market is hurting the game industry. In my eyes, it has the same effect as piracy, and it might as well be piracy. A large portion of gamers wait to buy games used, and then sell them right afterwards, this not only causes publishers and developers to leave out content for the sake of DLC, but really messes with the actual success of any given title or studio. Its just not right. For an industry that supposedly makes more revenue than the film, tv and movie industries combined, the developers sure are under compensated. Used game sales are just one factor in the bigger picture.

Terry Matthes
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People buy used games because a lot of them have a problem with the price of buying a new game. If games were cheaper I would suspect the amount of second hand sales would go down. I'm not personally saying I think games are too expensive, but I think that with the recent popularity increase of DLC we are seeing a lot of games doing quite well selling for only $10 or $20. Perhaps this is the sweet spot for the consumer market. It might be low, but that's just the reality of it.

Neale Davidson
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And there it is... "I think used games are piracy". I figured this was yet another thinly-vieled attack on the trade and sale of used games, since it's far from the first. It's based on the idiotic notion that if I buy 'used game x' that it's the same as stealing from the publisher, despite the fact that there's still only the one game in circulation (not an illegal copy) because the FIRST buyer gave his copy up.



I might buy used for a cheaper price. What's more likely the case is that I'll get a used game because it's now impossible to find it NEW anywhere. Got a PS2 you want to complete your .hack library for - good luck only getting new copies of all those games. But if you buy GU as a used title, you're an evil pirate nazi who wants to rape babies, etc.



It's an idiotic response to the consumer because the 'publisher' wants to CONTROL WHAT YOU BUY, much less how you get to buy it. And, hey, attacking one of your largest retail channels like this is just another brilliant idea from the same exact guys who put PC gaming were it is today!

Mel Ann
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I just saw the website that the attorneys made for their case...



www.GameStopLawsuit.com

Benjamin Burgess
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I don't even see how this is even an issue. All he had to do was ask someone if he buys it used does it also include the free content. Stop relying on the retailers to give you 100% of the facts. Like just the other day I wanted to find Half-Life 2 for the PC pre-owned but I also wanted the source SDK from Steam. Turns out even if they sold the game I could not get the source SDK because the free steam code has already been used, so it would be cheaper to just buy it new. He shouldn't get any money because he was too lazy to figure it out for himself, and he had seven days to see if everything worked correctly before his purchase was made permanent. I can't even count how many times I bought a game from Game Stop and it didn't work or was just plain boring, so within the seven day limit I took it back for another title. He had ample time to correct HIS mistake.


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