Buy.com class action-Hitachi fiasco. Do not delete

[WoundedWallet]

[/b]7,000 affected customers !!!!!

Do you think we can now sue Wired for misleading us?
http://www.wired.com/news/business/0,1367,17803,00.html
http://www.wired.com/news/business/0,1367,18380,00.html
Or was it Buy.com that misled them?

Geez I can't belive Buycomp still manages to make me mad after all this time.

So I take it back what I said about spending the money at buy.com, I'll probably go to a Red Lobster instead. So how many lobster do you think I can eat with $50 bucks?

Anyway, since I did the search here is a little piece of history for those that missed the whole story.

http://news.cnet.com/news//0-1007-200-338647.html
http://news.cnet.com/news//0-1007-200-338537.html
http://news.cnet.com/news//0-1007-200-338475.html
http://news.cnet.com/news//0-1007-200-342192.html

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Dear Valued Customer;

Regretfully, the item/s listed below from your 2/8/99 order with BUY.COM were sold out prior to your order being shipped from our warehouse.

The manufacturer of this product has provided us with an estimated ETA of for replacement inventory to arrive at our warehouses. Should this date change, we will inform you via e-mail of the revised date.

Once the product is received in our warehouse, we will ship your product out per your order instructions. If you wish to cancel this item, please contact our customer service department by replying to this e-mail at cancellations@buy.com or contact us by phone at 888 880-1030, M-F 7am - 5pm PST.

We appreciate your business and hope to continue providing you the latest products, lowest prices and exceptional customer service into the future.

Thank you for shopping at BUY.COM

Team BUY.COM
---------------------------------------------------------------------

 

[pjs]

It just amazes and angers me that big companies continue to lie in order to make themselves look good in the public eye. Even when confronted with their lies, they say they are settling just to "move on with (fill in your favorite forward sounding sound bite here)" , "put this issue behind us" , or to "cut our losses". This settlement is chump change to them. And frankly, us customers, as individuals, are chumps to big companies like this.

Buycomp has become better, but only because of of pressures put upon them by unhappy customers.

Paul

 

[WT]

7,000 ??? OM-freekin-Gawd. That's VERY high compared to what we all were led to believe. They must be counting the multiple orders .. LoL ... at that price, I know peeps who ordered 4. Well, I am now wondering if its the usual GC from Buy.com , who I swore I would never purchase from after this, or just $50. Gut instinct is a GC ... but yanno when we all get that $$$$$, someone will post a HOT DEAL and it will be outta stock in no time. That will at least pay for most of a 566 Celeron if THOSE are in stock by the settlement date. *fingers crossed*

 

[Ribbet]

WoundedWallet :::

>>>So how many lobster do you think I can eat with $50 bucks?

Lobster: none; Crawdads (sp?): about 3. But go for gold: a 5 lb. lobster might set you back only about $250 (Yum! The last 5-pounder I tried was $35.)

======================

7000! Where did that # come from? Now I'm getting pi$$ed (again).

From Wired's 1999 articles:::

"Buy.com said it would honor less than 200 of the 1,600 orders for the monitor it accepted over the weekend."

"Buy.com reneged on more than 1,400 orders Tuesday... If the judge finds in favor of the class, the award could be as high as $400 per person."

(NOTE: That's 1400/1600 orders, NOT 1400/1600 people ordering!)

From an e-mail from Greg Hawkins, Buy.Com's CEO, posted here 5/18/99 (we saved virtually everything posted from that period):

"...As you may know I am a newcomer to BUY.COM. I joined the company after the Hitachi monitor error occurred. Nevertheless ..."

"...Our distributor had approximately 143 monitors on hand, more than enough to satisfy reasonably expectable demand for the monitor under the correct price. Those 143 monitors were shipped to customers. Because overnight orders are automatically given priority in our system, those orders shipped first ...." (NOTE: Several of us were told by BC's CSRs that they shipped first-in/first-out.)

===========================================

1. Those of you who: a) went to court (Harvey, Carolyn, others?); or b) attended Hawkin's sojourn (Nutiket, others?): DID THEY EVER INDICATE DURING YOUR CHATS how many monitors were ordered/how many people ordered? Come back guys/gals!

2. 7000 is greater than anyone (I know of) has mentioned/heard in 1 1/2 years. A number that large obviously reduces the proceeds to members of this class action suit. How is 7000 justified after months of 1400/1600 (or less?).

3. Guys/Gals: Let's cut this off before the damage.

======================================

I just e-mailed Troy Wolverton (troyw@cnet.com) citing the Wired articles and asking him how we suddenly went from 1400/1600 "orders" and $400/person (Wired articles) to 7000 "class-members" and $50/person.

Perhaps you could do the same.

It might also help to e-mail the "class" lawyers to ask what the "maximum" number of class members is: Understanding that some may opt-out, etc. -- what's the MAX?

 

[Thira]

pjs, you gotta be a lawyer!

 

[pjs]

Nope, not even close.

7,000 orders sound awfully high. I wonder who came up with that number.

Paul

 

[Unclemo]

It is complete garbage to sue and expect compensation over a price error. We all know errors are a part of human nature and that is life. It is greedy to want to rape a company that comes down to a simple error. It is true, if the amount of the product was just $15 no one would care to "prove a point" out of "principle". This is not principle, but greed.

And lawyers are lying bastards. My brother, who is in a custody battle has (had) the leading fathers' rights law firm on the case for one month. His lawyer, how stated she was extremely busy handling 65 other cases at the time charged my brother for nearly 100 hours of work for just that month. She was never in the office (in court alot for her other cases) and never returned phone calls. When my brother called it was their practice to charge a 15 minute at $60 rate for the receptionist to take a message!!!! When they sent out there $11,000 for the first month I compared it to our phone call logs and there was a crap load of bogus bills! My brother quickly fired them and got someone else... and after three months of discussing the billing details got the final bill down to around $7,000. I know there are some decent lawyers, but many of them take their profession because they want to make BIG money... and lawyers have it easy to bill outlandish hours and rates without anyone being able to prove their lies. Law is a corrupt profession and the world knows it. (BTW my sister is in her last year of law school and really has no plans or desire to continue with after garduating and she is in the top 5-10% of her class!) Lawyers=garbage=politicians=government!

Oh, vote for a small government please!!! hehehehe

 

[Epinephrine]

I was part of this whole fiasco and my main beef was that they charged everyone's credit card for the amount before shipping. I realize that this is a multi-million dollar company, but what a better way to generate some quick liquidity than to misprice an item and get 7000 orders for it. I believe that would come out to be 1.14 million, which is essentially a interest-free loan until they decide to credit your account. As an added bonus, you get all the press without having to spend a dime for it. Also, they *did* switch their policies a day after the misprice and failed to admit they did so. All in all, I don't really care about the money and have ordered from them many times, but the customer service that dealt with the ordeal was terrible. They have since improved, but the principle of the matter still stands.

Just my two cents worth...

 

[Robor]

For those of you who think Buy.com got screwed over in this deal consider this...

1. They left this price up all weekend. People called to verify the price and were given different explanations ranging from a pricing error to a weekend special.

2. They took several days to publicly respond and during that time customers were told several stories. Even their customer service reps didn't know what was going on for days.

3. They modified their "terms of service" page after the weekend and tried to use this as a reason for cancelling orders. That's right, they actually quoted the pricing error portion they added and Emailed it to customers.

4. They were well known for selling products for a loss to attract hits to their website. My brother works for a large distributor and he knows for a fact that Buy.com sells hardware under cost.

5. Although they said this was a typo, the actual price wasn't anywhere similar to the advertised price. Most people that if this was an error it was caused by Buy.com's web spider that searches the net for prices then undercuts them.

6. Anyone who thinks those who spearheaded this were just in it for the money are crazy. If you were involved at the time (I was) you'd know that these people put in far more time than it was worth in money. I can't remember everyone but I know Harvey & (I think) Carolyn can tell you it wasn't about the money.


I feel that if Buy.com had just explained the truth this wouldn't have happened. Instead they took several days to formulate their story and plan it with their lawyers. From what I see they have changed their business practices as a result so maybe it's a good thing...

Rob

 

[Ribbet]

Update/FYI: CNet article (7000 class members).

At least 2 of us e-mailed Troy Wolverton, author of the cnet article claiming 7000 **people** ordered -- Another link to Troy's article

Here's Troy's 10/16 response to our e-mails (btw, thanks Dan!):

===================== end quote

Hi:

Thanks for your notes. I stand by the statement in the story.

Attorneys for Buy.com and for the plaintiffs said that there were about
6,900 to 7,000 customers whose orders were affected by the mistaken price.
The initial numbers of 1,400 orders or 1,600 orders were inaccurate,
according to Buy.com's attorney.

In fact, Buy.com's attorney said there were more than 6,900 orders placed
for the monitor, with one particular customer ordering 150 monitors alone.

Given just 7,000 orders, the loss Buy.com would have taken on fulfilling
those orders would have been $2.8 million, quite a bit larger than the
$575,000 settlement figure.

Troy

===================== end quote

The highlighted paragraph still seems to confuse the issue of # of people ordering versus # of monitors ordered.

===================== [Edit for 2nd update]
Troy's 2nd e-mail to clarify the para. highlighted above:::

"According to Buy.com's attorneys, there are some 6,900 to 7,000
people/customers involved and even more orders. I hope that clarifies things."
===================== [/Edit]

 

[shamu]

one thing I'm confused on. for that person who made one order for 150 monitors, will that person still get $50 for the whole order or will they get more.

 

[pjs]

Yes to what Robor said.

On two seperate calls I placed to Buycomp I was told the price was vilid and that it was a weekend special. This was while Buycomp upper management was off at a ski resort for a few days. I still think buycomp is getting off lightly.

The guy that ordered 150 monitors should get less for being so greedy!!!

Paul

 

[Ribbet]

Shamu ...

Your question (one thing I'm confused on. for that person who made one order for 150 monitors, will that person still get $50 for the whole order or will they get more) is answered earlier in this thread. From the e-mail we got from the Class' lawyers:

"Each class member shall receive one share of the fund, regardless of the number of monitors a class member attempted to purchase."

 

[DJP]

I ordered one of these monitors. I'm glad they got sued. They were jerks about the whole ordeal. I kept calling and CSRs kept telling me that it was a "special deal" and that I should sit tight and wait for my monitor. A week later the story changed and they were rude/hung up on me. Eventually, I talked to a manager who told me that it was luck for those who actually got monitors (not who ordered first but who ordered one that lived close to the dist centers that had stock. Even that didn't make sense to me really..) Some people got the monitor. Some people ordered 2 and got 1. Most people got nothing but empty promises and a $200 charge (the 200 included shipping) on the CC bill.

So, much good has come out of this already:

1. Buy.com does not charge the CC until the item ships. It used to be charge first, ship whenever (MONTHS sometimes). They borrowed $200 from 7000 people for about a week. Hmmmm lets see... $1,400,000 earning interest for a week - a nice chunk of change to say the least. I did eventually get a credit on my card for the whole amount but if you add the time that I spent on the phone to CSR on an hourly basis, I paid a LOT for that monitor!

2. Buy.com used to have the reputation that "it was cheap but never rely on it if anything important is on the line". They're MUCH better now and their rep has improved dramatically.

3. Buy.com has fairly clear and useful policies now.

I could care less if I get $50 out of the suit, I'm just glad buy.com has shaped up.

 

[WoundedWallet]

Well, the one thing I can think of is about elections on a small town. When all of a sudden a bunch of ghost voters appear in the final tally.

I would not be too surprised if Buycom inflated that number so that half of the settlement money went back to the company.

I know some people will think this is too far fetched, but I've seen stuff much worse than that.

I guess we need to find out how many different email addresses were handed to the lawyers.

 

[Danlz]

...humph, 1400, 1600, 6900, 7000... smells like the boys are cookin' the books out on the golf course again!

 

[pjs]

And they will probably stick us with a $20 shipping charge to send us our checks.

Paul

 

[spec411]

funny how the people who crap on the lawyers and preach dont "rape" these companies (especially a company with "good" deals like buy.com) arent the people who were involved or even know ANYTHING about this issue...

the people who were affected KNOW this was much more than a typo on a price, and buy.coms business practices were crapola...

and the only reason buy.com is a reputable company today is because of this lawsuit and the changes made .....

yeah, the person who paid their attorney $7000 for child support issues and could never reach their attorney should be pissed, but the attorneys in this case did an excellent job and got a good settlement...

and made buy.com a safer place for all of us to shop today. At least now we dont have to worry that if we order something and its oout of stock theyll charge us immediately and not ship until months later (thats what they used to do!)

 

[Btaisho]

I thought this was an interesting if not entertaining read.
The article below can be found here: (be sure to read some of the comments posted below the article online)

Buy.com: How low can you go?
By David Coursey, ZDNet News
October 17, 2000 5:14 AM PT


If you incorrectly mark the price of an item in your online store, how much should you have to pay?
For Buy.com the answer is $575,000, the proposed settlement in a dispute over a $600 19-inch Hitachi monitor the company said it listed online for $164.50 for four days last February.

Buy.com says it was all an honest mistake -- a typographical error. It honored the price for the 143 monitors it had in stock but refused to ship more at the lower price. Consumers cried foul, and lawyers got involved.
According to the New York Times, which reported the story on Saturday, several would-be customers complained about bait-and-switch tactics, accusing the company of intentionally pricing the product lower than it intended to sell it for in order to draw customers into its online store. That led to a class-action lawsuit and the proposed settlement.

These people should be ashamed of themselves -- and I'm not talking about Buy.com.

How much is enough?
How much does a company have to do to make things right when it screws up? Is shipping 143 units at a $400 discount not enough of an apology? Was anybody really damaged by this error? Or is this whole affair just some lawyer's idea of a good time, draining cash off a dot-com?

Under terms of the agreement -- due for court approval later this year -- each of the 7,000 customers will get $50. But the law firm gets a real payday: $190,000 plus court costs and expenses. So who is the real winner in this injustice? Well, it's not the customers, who still don't get their monitors, and not Buy.com, which seemed to make a decent attempt to do the right thing.

Buy.com's attorney told the Times the settlement was a way to get past the problem rather than have it drag on endlessly -- and expensively. Under terms of the agreement, the company admits no wrongdoing but has taken steps to double-check its prices and improve customer service.

Now, I'm the first guy to complain about companies doing consumers wrong. You may remember my columns about the flap over Amazon.com and its price testing. Or the one complaining that Windows Me should be a giveaway, not a $50 upgrade. I know about greedy companies.

But consumers (and especially their lawyers) can do companies wrong, too.

In this case I think Buy.com got hosed by lawyers always looking to turn a molehill into a million, or at least $575,000 in this case. For their efforts, the aggrieved consumers get $50 each, which is about enough for a nice dinner and a movie -- for one. I hope all those people who heard about the error on chat boards and then lined up to take advantage are really proud of themselves.

A decent person would take the check and send it back to Buy.com, with an apology.




<< Text >>

here

 

[Btaisho]

I thought this was an interesting if not entertaining read.
The article below can be found

<< Text >>

here: (be sure to read some of the comments posted below the article online)

Buy.com: How low can you go?
By David Coursey, ZDNet News
October 17, 2000 5:14 AM PT


If you incorrectly mark the price of an item in your online store, how much should you have to pay?
For Buy.com the answer is $575,000, the proposed settlement in a dispute over a $600 19-inch Hitachi monitor the company said it listed online for $164.50 for four days last February.

Buy.com says it was all an honest mistake -- a typographical error. It honored the price for the 143 monitors it had in stock but refused to ship more at the lower price. Consumers cried foul, and lawyers got involved.
According to the New York Times, which reported the story on Saturday, several would-be customers complained about bait-and-switch tactics, accusing the company of intentionally pricing the product lower than it intended to sell it for in order to draw customers into its online store. That led to a class-action lawsuit and the proposed settlement.

These people should be ashamed of themselves -- and I'm not talking about Buy.com.

How much is enough?
How much does a company have to do to make things right when it screws up? Is shipping 143 units at a $400 discount not enough of an apology? Was anybody really damaged by this error? Or is this whole affair just some lawyer's idea of a good time, draining cash off a dot-com?

Under terms of the agreement -- due for court approval later this year -- each of the 7,000 customers will get $50. But the law firm gets a real payday: $190,000 plus court costs and expenses. So who is the real winner in this injustice? Well, it's not the customers, who still don't get their monitors, and not Buy.com, which seemed to make a decent attempt to do the right thing.

Buy.com's attorney told the Times the settlement was a way to get past the problem rather than have it drag on endlessly -- and expensively. Under terms of the agreement, the company admits no wrongdoing but has taken steps to double-check its prices and improve customer service.

Now, I'm the first guy to complain about companies doing consumers wrong. You may remember my columns about the flap over Amazon.com and its price testing. Or the one complaining that Windows Me should be a giveaway, not a $50 upgrade. I know about greedy companies.

But consumers (and especially their lawyers) can do companies wrong, too.

In this case I think Buy.com got hosed by lawyers always looking to turn a molehill into a million, or at least $575,000 in this case. For their efforts, the aggrieved consumers get $50 each, which is about enough for a nice dinner and a movie -- for one. I hope all those people who heard about the error on chat boards and then lined up to take advantage are really proud of themselves.

A decent person would take the check and send it back to Buy.com, with an apology.

 

[pjs]

David Coursey should get his facts straight and not just buy what Buycomp is feeding him hook line and sinker.

Paul

 

[jjm]

I have refrained from commenting up to this point. But I'd like to set the record straight.

First, a disclosure: I was one who ordered a monitor and did not get it. I did not sue, but I had extensive direct communication with Buy.com and, more specifically, its chief counsel. I did not ask for or receive a settlement either.

Buy.com got into trouble because its business model failed for lack of adequate controls. In its haste to get up and running, it cut corners on controls. It originally charged each customer's credit card before checking to see if the price was right or if the item was even in stock. Buy.com knew that charging the card consummated the contract, but it chose to take that risk in the interests of building a reputation for being the fastest retailer on the net. Don't be fooled people.

As well, the 143 monitors got out not as a result of a goodwill gesture, but because the company had so highly automated its order fulfillment system, the monitors were gone before Buy.com realized what was happening.

The result of all this is that Buy.com no longer charges credit cards until the order is shipped and orders are reviewed for accuracy.

This company took a calculated risk (perhaps a foolish risk?) in the way it originally built its business model. It then suffered the consequences when that risk came back to bite it. Simple as that. There is no moral crusade here. It's simple business. Buy.com doesn't like it, but that's the way business works, and it knew it then and knows it now. The market punished this company for a flawed implementation of its strategy. In this case, the company survived. Therefore, in a sense, Buy.com correctly calculated that the risk it was taking would not sink the company, just hurt it. But the business world is littered with the remains of businesses that were not so lucky.

 

[denali]

To everyone who says this will hurt Buy.com you are wrong, the only consequence they may face is an increase in their insurance premiums.

&quot;Plaintiff's counsel in each action has agreed to settle the suits and we expect the settlement amount to be covered by our insurance carrier.&quot;

The above is taken from Buy.com's latest 10-Q. It's on page 29, ITEM 1. LEGAL PROCEEDINGS

I was one of the WMC don't shop at Buy.com anymore. What I have never understood is why Buy.com did not have their database setup to do the following.

a) contain a live inventory, at the time the inventory was updated maybe only once a day if that often.

b) put some sanity checks on their pricing, if a price offered was less than their cost or some markup value someone should be notified automatically.

c) track how many orders for an item occur. If you normally sell 2 of an item in a day and all of a sudden you have 10 orders on a day someone should be notified.

At the time Buy.com was touting that they had bots that searched the Internet for competitors prices and then they would match/beat them so it's hard to tell if a human was inviolved it setting the price.

 

[Danlz]

Be it bait and switch, insufficient controls, data entry error, or search bots on competitor's pricing, the one thing that stands out in my mind at the time was that the Buy.com guy that could fix the monitor price &quot;...was on a weekend ski trip and couldn't be reached&quot;. Now, this was being reported by their CSR's from about Sunday through Tuesday if my memory serves me correct, as posted by us WMC that were telephoning them for price confirmation. Now let's get real: Buy.com was bleeding to death and they couldn't reach him? That's was BS! I understand this guy is now a bigwig over at a national wholesaler compliments of a relative. BTW, did anyone ever findout if Elizabeth was a real person?

 

[Insomniac]

I was a WMC, but I chose not to sue. Yes Buy.com floated $400 of mine for a week. Yes Buy.com made up all kinds of stories. So what. They made some mistakes and handled them very poorly. They are certainly entitled to screw up. At the time, how many other companies messed up like this? They were probably the first well publicized one. Anyways, Buy.com is a much better company now, and it can be argued they are that way because of the law suit, although I do not agree. I think they did it because without those changes they'd be belly-up right now. I am part of this suit now, and I assure you that I won't mail the check back with a note, but I will spend every penny of it at Buy.com.