GameStop’s Employee Checkout and Deceptive Trade Practices

Kotaku recently ran a piece noting that the FTC may be interested in the ’employee check out’ policy in terms of a deceptive trade practice. The article goes into some detail about the ability of GameStop employees to check out titles from the store on a temporary basis, and in the event these titles are ‘new,’ then they are brought back in and resold as new. It certainly poses an interesting question: is that a deception to the consumer?

Before talking about substantive law and my take on the issue, I did want to point out one particular clause in the policy, as posted by Kotaku: “If the product is returned in unsellable condition, or if anything is missing from the package, or if the product is not returned, the Associate must purchase the product at the current price less Associate discount.” As I have known quite a few GameStop employees over the years, I know that this part of the policy greatly deters the checking out of new games in favor of used ones. After all, even the slightest inclination that a new game isn’t ‘new’ will more than likely force the employee to buy the game, which many of these employees can’t afford. A used game has an expected level of wear and tear, so the bar is much lower for the return to store condition.

So, back to the point at hand: is this a deceptive trade practice? There’s both a legal and a pragmatic approach to the answer of this question. From a legal standpoint, ignoring any pragmatic analysis, it certainly seems that way from the letter of the law. Certainly, it’s something the FTC could investigate, but more practically, it may be a matter for state deceptive trade practices law. In Texas, for example, it is a deceptive trade practice if you are “representing that goods are original or new if they are deteriorated, reconditioned, reclaimed, used, or secondhand.”

Of course, the law does not exist in a vacuum, and from a practical standpoint, I’m not sure what GameStop is doing is as nefarious as some people seem to think. The resale of used goods as new rules had a simple policy argument: when they were implemented, practically all goods had a limited useful life, and any use of them would lessen that useful life. If I re-sold a used console, the console’s useful life has diminished. If I re-sold a used TV, that TV’s life has diminished. That’s not exactly the case with a DVD based media. DVDs do in fact deteriorate, but that’s something with a clock that begins from production based on normal biodegrading. If a disk has been properly used in a machine and properly handled, has its life been diminished? I haven’t seen any data to suggest that it’s anything at all, much less anything significant.

Obviously, if the disk, packaging, or other materials are damaged in any way, or if one-time use download codes are used during the check-out, there is no question that reselling that as new would likely be a deceptive act. Of course, the damages would be relatively minute ($5 or so based on the average new release’s used price), which could provide difficulty in generating an actual lawsuit over the issue. However, when the disk is cared for and no damage comes to any aspect of the product, has its value actually been reduced? No, and the content of the product is still 100% present. It’s a little more nebulous with respect to DS games, as the last of the cartridge systems. I don’t know if they have a useful life as determined by play time or not.

From a practical standpoint, I still don’t see why GameStop hasn’t moved to reproducing cover art with publisher permission and just re-using empty cases so that no titles have to be opened. Granted, that would basically limit employee check out to used titles, but I’m not sure that’s a huge loss to the average employee as many new releases are in short enough supply to prevent check out by the policy as reported by Kotaku anyway. It will certainly be interesting to see if the FTC takes any action on this matter, but from a pragmatic standpoint, I’m not sure they will based on the facts.

[EDIT: I’ve posted some follow-up commentary here.]

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About Mark Methenitis

Mark Methenitis is an attorney in Dallas Texas. Mark received his Juris Doctorate and his Master of Business Administration from Texas Tech University and his Bachelor of Arts from The University of Texas.

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