Supreme Court Rejects Appeal In Best Buy, Microsoft Racketeering Lawsuit

The Supreme Court has rejected Microsoft and Best Buy’s appeal in the MSN racketeering lawsuit, says the Wall Street Journal, thus “ending a bid by the two companies to stop a class-action lawsuit over a joint marketing campaign for MSN Internet Access service.”

The so-called marketing campaign involved (allegedly) signing hapless Best Buy customers up for MSN accounts. Microsoft is accused of paying Best Buy to collect and use customer’s credit card information without their permission, signing them up for “free trials” of MSN that they didn’t want and or weren’t aware existed. When the free trial period was up, MSN began to bill them without their knowledge or consent.

The lawsuit alleges that the marketing agreement between Best Buy and Microsoft qualifies as an “enterprise” under the Racketeer Influenced and Corrupt Organizations Act. From the WSJ:

“The rule in effect would make a broad range of routine corporate conduct actionable under RICO,” the companies said in the appeal. “This dramatic increase in potential corporate RICO liability with its draconian remedies warrants review.”

The case will now be sent back down to the lower courts.

Supreme Court Rejects Microsoft, Best Buy Appeal in Fraud Lawsuit [WSJ](Thanks, Bob!)
(Photo:meghannmarco)

PREVIOUSLY: Best Buy Attorney Admits To Falsifying Emails In Racketeering Case
Best Buy Employee Confesses To Scams Similar To Ones Outlined In Racketeering Lawsuit
Best Buy, Microsoft Accused Of Racketeering

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  1. Anonymous says:

    hahaha! i hate msn! and coincidentally, best buy.

  2. mupethifi says:

    anytime best buy has to pay, it makes my day

  3. SaveMeJeebus says:

    Lemme guess… all affected will receive 6 more free months of MSN now.

  4. Anonymous says:

    or a coupon for $19 off msn services (credit card required). lol

  5. Randal Milholland says:

    @ SavemeJeebus:

    And probably a free harddrive scan by GeekSquad!

  6. Indecision says:

    This is the most ridiculous lawsuit. I used to work for Best Buy, and I can tell you quite clearly the truth of the matter.

    1) Best Buy customers had the ability to sign up for a free trial of MSN in the store. To do so, a customer would take the MSN CD/brochure to a cash register. The customer-facing display would display a short “I agree to the terms of the MSN trial” type of message (printed on the aforementioned brochure). The customer would need to sign in a box on the display, then swipe a credit card (which could only be done on the customer-facing side, the register itself wouldn’t accept the swipe for this).

    2) Best Buy managers would receive bonuses based on the number of trial subscriptions given out in there store.

    3) Some managers would then ignore the official procedures, and pressure their employees to surreptitiously scan the MSN CD with any purchase, and deceive the customers into passing through the signup (or the managers would themselves do it). For example, reach over to the customer-facing display, scrawl something in the signature box, and then tell them to swipe their card for payment. Once MSN accepted it, they’d say, “Sorry, that didn’t go through, can you swipe/sign again?”

    Don’t think I’m trying to excuse the behaviour; I’m not. Someone needs to be punished for it. First (and more on this in a sec), these were individual managers acting against the rules given to them by Best Buy Corporate, and without the knowledge of MSN, purely for their personal benefit. Calling it “racketeering” is ridiculous, and I actually feel bad for anyone at MSN who got dragged into this. If anything, the managers responsible for the behavior should be sued into oblivion.

    But Best Buy Corporate also needs to take a realistic look at its policies. You can’t say “sell more of X and you get more money,” then rank stores/managers against each other on sales of X, fail to catch (and thereby reward) cheating, and then expect people not to cheat. They know what’s going on; they have to. But they’ve created a buffer to protect themselves. They have the official codified “don’t cheat” policy, but they create an environment where cheating is the only way to maintain the status quo. But when cheating is uncovered, they get to pull out the “rogue manager breaking the rules” defense.

    So there’s also sorts of no-good-ness going on here, but I don’t believe any of it is the fault of MSN.

  7. Trai_Dep says:

    It’s good to see Microsoft going back to being the Evil Empire that we all grew up despising a decade ago. Welcome back, Microsoft! (/heart)

  8. alfista says:

    I wonder why I feel that best buy giving back money means fewer honored rebates in the future?

  9. Indecision says:

    @alfista: “I wonder why I feel that best buy giving back money means fewer honored rebates in the future?”

    I don’t know. I’m no apologist (see my post above), but Best Buy’s doing something useful when it comes to rebates. Best Buy themselves no longer have mail-in rebates (at least, last I checked). They’re all instant rebates, taken off the total price right at the cash register. Any mail-in rebates seen in a Best Buy store are offered by the manufacturer of the product in question (and again last I checked, Best Buy was trying to convince manufacturers to do away with those as well).

  10. humphrmi says:

    The rule in effect would make a broad range of routine corporate conduct actionable under RICO

    THAT’s their argument??? “Don’t rule against us, everyone else is crooked too!”

    What hogwash. Go to hell, MS and BB.

  11. TexasScout says:

    @Indecision: You say it’s “not racketeering” yet in the last section of your reply you make it clear that it WAS.

  12. CumaeanSibyl says:

    The rule in effect would make a broad range of routine corporate conduct actionable under RICO.

    Wait, so your “routine corporate conduct” is illegal? Because it wouldn’t be actionable under RICO otherwise. Y’all aren’t helping your case.

  13. Buran says:

    @Indecision: If you do something illegal and criminal, you should be prosecuted under criminal law. End of story.

  14. Indecision says:

    @TexasScout: “You say it’s “not racketeering” yet in the last section of your reply you make it clear that it WAS.”

    Sorry, what I had meant to express was that I don’t believe the folks at MSN had anything to do with it, that there was no conspiracy between the two to commit any racketeering.

  15. Indecision says:

    @Buran: “If you do something illegal and criminal, you should be prosecuted under criminal law. End of story.”

    Show me where I said anything to the contrary, please. You’ll have a tough time, because I didn’t. So, what would be the point of your post?

  16. warf0x0r says:

    Twice after I quit Best Buy I got settlement checks for overtime practices that weren’t legal after litigation.

  17. skrom says:

    It doesnt matter if it was Best Buy or Circuit City or anywhere else. If you pay someone on bonuses they are gonna find ways to get signups. The only way to stop these things from happening is to not allow bonuses based on sales. Its the same with the truck drivers. Everyone complains that they drive so fast and ignore traffic laws. If they would make it illegal to pay by the mile and forced companies to pay by the hour I GUARANTEE the trucks would slow down and probably drive slower than they should. Problem solved

  18. Bourque77 says:

    @Indecision: Msn is included because they encouraged the illegal activities best buy was using (according to the story).

  19. Buran says:

    @Indecision: Then why did you say that the lawsuit was ridiculous? Seems like on one hand you’re condemning them for their illegal acts and on the other saying they shouldn’t be punished.

    So what is it? You can’t have both.

  20. Buran says:

    @skrom: Actually, the answer is to punish those who do illegal things. So you don’t get as big a bonus? So you don’t get as big a mileage check? That is not our problem. You find a way to do your job legally without cheating or potentially hurting other people to feed your selfish needs, or find a better-paying job or find a supplemental job. Or stop spending so damn much.

    Don’t like those choices? Too damn bad.

  21. scoopjones says:

    Listen, Indecision, I remember Best Buy trying this on me at their Santa Clarita, Calif., store about two years ago. The employee asked for my ID, then strangely started asking for my driver’s license number and Social Security number. I then saw on the credit card screen a short reference to MSN service and I asked the clerk what was going on. He explained it was a free trial and I could cancel it whenever I wanted. Luckily I was paying attention, unlike some customers. I was outraged and demanded he remove it. I called the manager over and complained that I didn’t authorize it, but I just got a shrug and a “whatever”. I later complained to Best Buy corporate and the state Attorney General’s office. Fortunately, some sharp-minded prosecutors in northern California contacted me and I gave them info on the scam. I’m very pleased they’re going after them for this ridiculous ploy.

  22. IRSistherootofallevil says:

    “Rogue manager”? Go to hell best buy. Best Buy put the manager in a shirt with the Best Buy name and empowered him to act on behalf of the company, therefore Best Buy will take responsibility for actions taken on the job by the particular manager. Whatever he does, personal or otherwise, reflects on Best Buy. It’s Best Buy’s job to control the rogue manager. Not that the rogue manager is off the hook….

  23. Phildawg says:

    I’ve said it before, I’ll say it again. I was instructed by management and actively participating in this many times per day. We were instructed to use confusion tactics and even click through options on the touchpad and also we were instructed to act as if something messed up and they needed to slide their credit card twice. Once was for the MSN activation, a few minutes later, oops looks like it didn’t work, you need to slide your CC again to finish up this payment.

    Why did they do this? First it was one of the major things tracked by the company on a PC sold vs MSN accounts setup. The company earned 25 dollars on the bottom line for every sign up and this of course was pure profit. If a store was not at least at a 50% attachment, with goals of 75-90%, our supervisors would be fired, and management could even be replaced. We had to get the sign ups per corporate, however, we were supposed to get the 75% goal the legit way. I’m sorry, but exactly how is that possible? Our strategy did not come from store managers, but was actually district wide, and believe to be regional and company wide. How were stores hitting 90-95% attachment ratios? The only people who couldn’t be tricked were those not paying with a credit card, so you couldn’t get 100%.

    Oh and MS was COMPLETELY against this behavior and caught on to it. What they began doing is offering full refunds to customers who had never actually logged in and used the surface. They also modified the Terms with Best Buy and we would no longer earn our cut if the customers never signed up. Our solution? Simple, a single terminal window with a manual connection, and at the end of the night spending approximately 20 minutes to log on every single MSN activation that had been done that day.

    Best Buy can burn in hell. I cannot believe I let my ethics be compromised by this sorry piece of crap company, but I needed my paycheck and I was a Yes Man. If you weren’t a Yes Man at Best Buy, you were a Fired Man. To many, that’s a pretty scary thing when you are self supporting yourself through college. It’s easy to have Ethics when Mommy and Daddy will pay for your school, pay your bills, and take care of you. Not everybody is so lucky and not everybody wants to quit their job and look for another. Most saw it as an ends to a means and we would only have to do it for a couple of years until we could get real jobs.

  24. BigNutty says:

    These type of marketing ploys are hatched in the back rooms of many corporate giants. Even if (or when) they get caught, they win.

    Everything is planned for. Like a chess game many of these corporations are many moves ahead in the game.

    As a consumer you have to always assume that you are a target and start thinking like them.

  25. Indecision says:

    @Buran: “Then why did you say that the lawsuit was ridiculous?”

    The lawsuit targets Microsoft as well as Best Buy. Microsoft isn’t at fault, and like Phildawg said above, was in fact very much opposed to Best Buy’s tactics. That fact has been known for a long time, I even remember seeing a news article or two mentioning it.

    So why are they being sued? The only reason I can think of is because the lawyer in charge (it’s a class-action, so there’s definitely a lawyer in charge of it) just wants more and deeper pockets to target. The lawyers, after all, are always the real winners in any successful class-action. And that makes me think of the entire lawsuit as ridiculous, as I don’t believe there’s any interest in the consumer behind it.

  26. Indecision says:

    @scoopjones: “Listen, Indecision…”

    So, I listened, and I don’t see the point in you calling me out. All you did was reiterate what I already said. See my #3. Yes, that’s exactly what happened.

  27. edrebber says:

    I wonder how many supreme court justices got signed up for msn without their consent.

  28. Buran says:

    @Phildawg: “I was instructed by management and actively participating in this many times per day. We were instructed to use confusion tactics and even click through options on the touchpad and also we were instructed to act as if something messed up and they needed to slide their credit card twice.”

    Doesn’t matter who told you to do it, allegedly. It’s illegal, and you should have been punished severely. I know I would have considered calling the police on you.