Court: Microsoft, Best Buy must stand trial for racketeering

SAN FRANCISCO
May 4, 2007 10:46am

Microsoft Corp. (NASDAQ: MSFT) and Best Buy Co. Inc. (NYSE: BBY) must stand trial on charges they violated the federal anti-racketeering laws, the 9th U.S. Circuit Court of Appeals ruled Friday.

The two companies are accused of secretly signing up buyers of computers and cell phones for Microsoft’s MSN Internet service.

In reversing a U.S. District Court ruling that had tossed the lawsuit, the court of appeals says there is enough substance to the complaints to bring the companies to trial under the Racketeer Influenced and Corrupt Organizations Act, often called the “RICO” act.

The case started after James Odom bought a PC-based laptop at a Contra Costa County Best Buy store. Data about the purchase was sent to Microsoft as part of a joint marketing agreement between the companies. Microsoft then signed Mr. Odom up for its MSN Internet service and, after a free trial period, began billing him for it.

That was all done without his knowledge or agreement, he says.

A similar incident happened to the buyer of a cell phone at a Reno Best Buy store, the case says. Microsoft withdrew monthly MSN payments from her debit card account for 17 months without her knowledge or permission, the allegations say.

Best Buy said Monday it would have no comment at this time. Microsoft has not responded to a request for comment.

Comments on this story

Mario 5/5/07 11:37 AM
How are people so oblivious that they overlook 17 months of payments of ~$19? It seems amazing to me in this age of "rampant" identity theft, that people continue to conduct their personal finances so carelessly. I guess I'm starting to understand how so many Americans can spend more than we earn. We're just that careless.

R Pendleton 5/5/07 12:24 PM
Without commenting on the legitimacy of the case, I think it is fair to ask if people actually read their bank statements. That it actually took the Reno woman 17 months to notice that her account was being debited is utterly incredible.

Hal 5/5/07 3:37 PM
OK! So most people are idiots ? (Generalisation) Is it still ok to steal from idiots ?

Bruno 5/5/07 3:54 PM
What? Do you know how many couples have a spouse who pays all the bills while the other has no clue. Do you think they question every transaction? Blame it on the people for being stupid, right

Jim 5/5/07 4:10 PM
Whether or not people read their monthly bank statements has no bearing on the illegal act of signing people up and charging them for unrequested services.

Ray 5/6/07 12:32 AM
So if MSN claims they automatically sign people up without getting their approval, begin charging them, the "customer" just has to read their bank statement and call to cancel? Right. No intent to trick people there. And if the customer called Best Buy to cancel, what do you think Best Buy said? Probably, "Sorry, call MSN." That's how they get ya!

Anonymous 5/6/07 3:15 AM
I have now worked with Best Buy canada for the last 3 years. The code of conduct and the work ethic is of the highest order. There is only one mantra that Best Buy believes in i.e "customer centricity". With due respect to the customers involved, I am confident that there is more to this incident that we as readers on the internet do not know of. For example : In canada, when a customer buys a computer at a Best Buy/Future Shop store, they are eligible to get 3 months free high speed internet from Bell Canada. However, it is the responsibility of the customer to cancel the internet service in case they do not want to continue after the 3 months. It is really careless on the part of the customers if they do not cancel it and continue using the service. At the same time, I, as a part of the Best Buy corporation, take this opportunity to apologise on behalf of the entire company for any inconvenience caused to the customer. I am sure that whatever decision is reached will be a win situation for the customers involved.

OH ANONYMOUNS! 5/6/07 8:08 AM
GOOD! I hope somebody whispers in the Fed's ears that QWest/MSN are telling people MSN is their only DSL ISP available and ignoring local signed and approved ISPs. I know a specific case where the customer was first told "there are other ISPs available but I don't have the list right now" and, in pursuing it, was then specifically told by a second person "that ISP is not available in your area". I confirmed that the ISP, which I use, WAS available for her a couple miles away from me and well inside a metro beltway and I had her call my ISP to tell them her story. I can only hope local ISPs are collecting these stories to prepare a similar case with the Feds or their state attorney generals against QWest/MSN. And if you don't have broadband yet, don't listen to "customer service". They lie through their teeth. If you want something other than MSN, do some research to find out who is approved for QWest, even call that ISP first for information, and INSIST on up the chain at sign up that you want that ISP.

John 5/6/07 8:23 AM
"it is the responsibility of the customer to cancel the internet service in case they do not want to continue after the 3 months." --- I could not disagree more! You can not sign people up "automatically" with a purchase they may or may not know they are signed up) and then put the onus on them to cancel. Bell Canada tried this trick a few years back. They would give you "trial" services to customers without the customers request, then start billing these services after the trial was over. People called (myself included) to remove these charges and were told that THEY were responsible to cancel so the charges would stand. People freaked, and Bell reversed their decision and my charges were withdrawn. The moral is that if you want business from people you must sell to them. Not just start billing them and hope they don't notice or cancel. BestBuy and Microsoft abused the relationship they had with the client as soon as they started charging for things that were not sold to the client. The sellers and the buyer BOTH need to be in agreement and these type of situations abuse that.

Lord Bob 5/6/07 8:59 AM
Forcing the consumer to cancel a trial may be legit but it does not improve customer relations. The kind of people buying PCs from best buy are not generally the tech savvy but rather the new to computer or gift giving consumer. To force these consumers who have little or no experience with a computer in the first place to recognize that its their duty to cancel a trial subscription (In most other trials they have ever used or done it probably just expired) and expect them to be happy with you is silly. Best Buy has a perfect consumer base, people buying to buy with no clue what they actually are buying. But if you start using that against the consumer too much you're gonna piss them off.

A Very Cyncial Person 5/6/07 3:50 PM
Hi, welcome to the United States Canada man. We appreciate your time and effort and as a former employee of the Best Buy super conglomerate network I can say that ethics are something that they put on paper. Our store constantly was doing backend deals that many would cry over. I wouldn't say where I worked in Ohio but will say that it didn't care how they met their numbers as long as they met their numbers. Now, we all know Microsoft doesn't care for the average American nor does it really care about the people involved in getting sign-ups. It cares about one thing, money. It's not a hidden agenda for them. They want money, and will get it however they want. I will say that the guy probably signed the deal and didn't realize what he was signing (because we put your sales slips in front of the the form). You are right Mr. Canada man that there is more here than meets the eye. Most likely the computer jockey had a promotion deal going where he would win a toaster oven if they got more MSN sign-ups that night than anyone else. Guess who walked out with the toaster oven? Yep.

Hans Bezemer 6/11/07 2:44 AM (hansoft@bigfoot.com)
It seems this website is heavily monitored by Microsoft munchkins. Everybody who thinks that: - It is okay to steal from people "who don't check their records" - It is okay to steal from idiots Just exposes themselves to have the ethics of a con man. Well, basically that is what Microsoft is and stands for, isn't it? Like I've always said, Microsoft isn't a software company (How can they? They've never made any significant contribution to computing..) but just a money making machine. For those of you munchkins are something from the OS/2 era, just read this: http://slated.org/the_munchkins_are_back

Drew 6/11/07 8:44 AM
To Anonymous, I too worked at Best Buy close to 10 years ago while in College. When I worked there, it seemed that Best Buy cared more about it's customers than it's own employees. For example, I was fired from Best Buy, along with everyone else in the Audio/Car Audio departments. The reason you ask, they tried to accuse all of us of stealing merchandise when it was the manager back in the shipping area that was stealing. But they pulled us all in one at a time and tried to force us to write down everything that we have ever stolen from the company, none of us wrote down anything cause well, none of us stole anything. They threatened to fire me, take me to jail, bring in the local Sheriff and to even take a polygraph test. I welcomed them all as I told the Manager and Security guy yelling at me to write down what I've stolen to call the police, so I could explain to them what they were doing was illegal without actual proof. They ended up suspending us for two weeks, then fired us when we came to get our next check, something we had expected anyways as most of us already had new jobs elsewhere. From the remaining last person, he found out that they let us all go was the fact that they owed us money from retro pay while helping perform overnights with a new store on the southside of Indianapolis, they simply just didn't want to pay us. In the end, we sought out a lawyer but he said for the amount of money they owed us, it just wasn't worth it to seek a lawsuit and since most of us were all 18 and 19 years old and found other jobs, to just move on. He said we'd benefit more by contacting the local news but they didn't seem interested. Oh well, but I can totally see Best Buy pullling some **** like this since I've seen it in person how they treat their own employees.

Dark_Mystic 6/11/07 12:28 PM
Dear annoymous, In regard to your comment here: At the same time, I, as a part of the Best Buy corporation, take this opportunity to apologise on behalf of the entire company for any inconvenience caused to the customer. I am sure that whatever decision is reached will be a win situation for the customers involved. I don;t see you as having the authority to apologize for Best Buy in any capacity. And I feel you have over stepped the bounds of a normal employee in this regard. Which shows a lack of guidence in the rules and procedures ofBest Buy and common sense. You may work at Best Buy but since this case had nothing to do directly with you or your actions a apology from you about Best Buy's conduct is unwaranted and a slap to our face. Now as for this case there is little to no legal information avaiable I see so I am not forming a opinion either way on this matter since I can't see all hat happened. But I will say this though. Any publicity is good publicity -_-

Rick 6/11/07 3:21 PM
With Microsofts track record of business ethics I'm not surprised by this story.