Friday, May 25, 2007

Best Buy sued over Web price quotes

Connecticut goes to court; retailer denies misleading customers at in-store kiosks
BY GITA SITARAMIAH (Pioneer Press)

Electronics giant Best Buy Co. is being sued by the Connecticut attorney general after consumers complained they'd been quoted higher prices in stores for merchandise advertised at lower prices online.

The lawsuit alleges that since 2005, the company's stores have pledged to match any lower online price, including from its own Internet site. But customers tapping into in-store kiosks to check prices were misled by salespeople into believing they were tapping into the retailer's online Web site Bestbuy.com when they were actually connected to an internal company site, the suit contends.

When the kiosks displayed a higher price, the salespeople allegedly suggested that consumers had previously misread the lower online price or that the online price had expired.

"We intend to vigorously defend ourselves," Best Buy spokeswoman Susan Busch said in a statement. "The future of our company depends on our ability to build trusted relationships with our customers."

However, the Richfield-based company acknowledged that a small percentage of customers didn't receive the best price when they should have. It said once the issue was brought to the company's attention, it provided employee training to ensure that customers receive the best price and more changes are being made to eliminate further confusion.

The lawsuit filed in Connecticut Superior Court seeks civil penalties and restitution for "customers who purchased products at a higher price because they were deceived by Best Buy's misrepresentations."
George Rosenbaum, chairman of Chicago-based consumer research firm Leo J. Shapiro Associates, said he believes Best Buy made an operational error and isn't intentionally pricing the same products differently online versus in stores.

The company is probably moving fast to fix the problem because a good online presence is critical for drawing customers into stores with high-ticket items, Rosenbaum said.

"They're highly dependent on their Web site for traffic generation," Rosenbaum said. "This kind of an error, and I call it an error instead of a deliberate strategy, can badly hurt their customer relations if it isn't corrected."

Rosenbaum also believes the company still can do crisis control to avert damage to its image.

Best Buy has maintained its dominant position as the largest electronics retailer in the country while others have faltered recently. Chief rival Circuit City has closed stores, cut 3,400 workers and hired replacements at cheaper pay. Another rival, Comp USA, also is closing many stores nationally, including all of its Twin Cities locations.

Meanwhile, Best Buy posted a 22 percent increase in profit in its most recent quarter and saw the biggest improvement among retailers in the latest University of Michigan American Customer Satisfaction Index.

Connecticut Attorney General Richard Blumenthal said his office received at least 20 complaints after the Hartford Courant newspaper in February reported the experience of one frustrated Connecticut shopper.

The man found a laptop computer advertised for $729.99 on BestBuy.com, then went to a Best Buy store where an employee who seemed to check the same Web site told him the price was actually $879.99. (The shopper eventually did purchase the laptop at the discount after bringing in a copy of the online sale price to another store that had them in stock.)

Within days of the newspaper report, Blumenthal announced the investigation. On March 8, an open letter was posted at the retailer's Web site by Best Buy Chief Operating Officer Brian Dunn to "clear the air" regarding the investigation. Dunn wrote that the kiosks weren't to be used by employees to check Web prices, but that this process had not been followed consistently. He offered a toll-free number so the company could address customer concerns.

In a separate case, the Florida attorney general has done a three-year investigation into Best Buy for allegations including sale of used merchandise as new and restocking fees assessed on the price of merchandise returned including the taxes charged. Best Buy didn't offer comment Thursday on those allegations.

Best Buy operates more than 820 stores in 49 states, as well as stores in Canada and China. On Wall Street, Best Buy stock closed at $46.67, down 86 cents.

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