Class Action Certified In Suit Against Citibank Over IPod Mini Promotion

When Citibank offered free 4 GB iPod Minis to new customers in 2004 and 2005, the product was retailing for $249, and Citibank indirectly acknowledged the value of the product by saying they’d substitute an mp3 player of “equal or greater value” if there were fulfillment problems. There weren’t, but by the time Citibank got around to passing out the iPod Mini, it had dropped in price and a new 6 GB version was now on the market for $249. Citibank chose to take the savings and distribute the now cheaper 4-gig versions. Now there’s a class action lawsuit against Citibank in California, where it seems all class actions are born. You can read the ruling for the certification here (PDF).

(Thanks to Ronald!)
(Photo: Mike McCaffrey)

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  1. Smitty Werbenjagermanjensen says:

    I’m not sure I see the problem.

    They were offered 4GB and they got 4GB.

    No I didn’t read the .PDF

  2. ptkdude says:

    @Smitty Werbenjagermanjensen: I agree. They received what they were promised: a 4GB iPod Mini.

  3. C2D says:

    BZZZZT, wrong!

    The U.S. District Court for the Eastern District of Texas is the lawsuit capital of the US.

  4. B says:

    @ptkdude: @Smitty Werbenjagermanjensen: The problem is they were promised an item worth $249 and they got an item worth $199.

  5. HalOfBorg says:

    In the PDF it says that they were offered the $249.99 4Gig ipod Mini, but when it was time to deliver them Apple had stopped making that one, and were making a ‘new’ 4Gig iPod mini, that cost LESS. ($199.99)

    The customers were sent THOSE – and since they are NOT the SAME item advertised, and are NOT of “Equal or greater value”, then I suppose they have an argument.

  6. TheDude06 says:

    According to the filing, the original promo said something like “free ipod mini! a $249 value!”

    they were obligated to deliver a $249 value as part of the promotion, and they did not. Im obviously not a lawyer, but i believe the time they /actually got/ the ipod would be when its value is important, not when it was promised.

  7. Eldritch says:

    Dude… a free iPod is a free iPod. I don’t see the problem. It’s not like they were given a shitty Sundisc or slipped a Zune.

    Do people really care how much their FREE iPod cost?

  8. shiznannigan says:

    @B:

    No, they were promised a 4GB iPod, unless they weren’t available. They were available, and the deal was fulfilled. End of transaction.

    These people are being greedy, and I hope they get nothing.

  9. SahuaritaSam says:

    I can see why the lawsuit was put in place, but I agree with the comments above – it’s a case of greedy people making the most out of a gray situation.

  10. darksunfox says:

    We really would need to see the advertisement to be able to judge in this case. Reading the PDF, it says the facts of the case are heavily disputed, which means that without the advertisement itself, all we’re seeing is the claimant’s side of the story. The advertisement could just say “Free 4GB iPod mini (a $249 Value!)*” followed by “if 4GB iPod Mini not available, Citibank will substitute another MP3 player of equal or greater value”. Well, the people got iPod mini’s, just because the price dropped it doesn’t mean they didn’t get iPod mini’s. It’s impossible to tell without seeing the ad because the PDF doesn’t even quote it.

  11. rdldr1 says:

    Instead of getting a 1st gen 4GB iPod Mini, they get a 2nd gen 4GB iPod Mini with better battery life. I see nothing wrong there, except for the hoops the customers need to jump through;

    “You have to pay two bills each months for 12 consecutive months. You supposedly get the iPod after your first 2 bill payments, and will be required to continue the bill payments for the remaining 11 months or likely be charged for the iPod.”

    The only problem is that if they defaulted on the promotion, the customer will get $249 deducted rather than the actual value.

  12. If only Citibank hadn’t said how much the player costs, the problem would’ve been avoided.

  13. urban_ninjya says:

    God.. stupid lawsuits..

    Just be freaking happy they got their iPod. Of course the lawery would be happier running off with the fees worth far more than an iPod mini.

    Anyways.. I don’t think this lawsuit should have merit. They weren’t selling the iPod itself or any services that cost money (or at least no immediately). This shouldn’t be treated any differently than the free blender banks use to give out when opening a savings account.

  14. rdldr1 says:

    If somehow Citibank loses this lawsuit, I want to see the customers getting back the current value of the 2nd generation iPod mini; $20.

  15. forgottenpassword says:

    @rdldr1:

    I wish I could buy a brand new 4GB ipod mini for $20! I’d buy three!

    (i love my current, but old ipod mini)

  16. dragonfire81 says:

    this reeks of nitpickyness and splitting hairs, I’d put money Citi will win this lawsuit.

  17. S3CT says:

    Equal or greater value is what kills citibank. 199.99 does not equal 249.99. Yes there were no fulfillment problems but fact is the ipod shipped at the time was not valued at 249.99 as the terms promised. Next time they need to leave off the equal or greater value part that they thought they were so clever in adding and find another way to cover their behinds.

  18. Seems like reserving a right to substitute another player of “equal or greater value” for a “4 GB iPod mini” is not an obligation to do so because if the price or specs of the item change between inking the deal and fulfillment. They were promised a 4 GB mini. They got a 4 GB mini. Contract fulfilled.

    If they had said “4 GB mini (1st generation)“, well, that’d be different. They got a 2nd generation one. But that specificity wasn’t in the deal.

    I know this is just logic, here, which doesn’t always apply in the courtroom.

  19. Invalid_User_Name says:

    I can’t believe that I am saying this: I think the bank should win. What’s the world coming to?

  20. bravo369 says:

    i was about to be like some people and say the people got what they wanted so whats the big deal. although the 4gb ipod is still useful, it’s not exactly market value anymore. imagine winning a contest for a brand new 2008 mustang. 5 years later, in 2013, they deliver you a 2008 mustang. sure you got a car but it’s 5 years old already, well below what the market value of it was 5 years ago when you could have sold it if you needed to.

    basically i agree with the lawsuit. they basically ran a promotion, promised a prize worth $250, waited until it dropped and then pocketed the difference. Citibank should absolutely offer a new $250 market value prize…or at least give people the option of taking $250 or a 4gb ipod.

  21. dweebster says:

    This promotion was such a sham anyhow. Took a MONTH for them to open a simple checking account – made me visit a local branch TWICE to verify myself (on one trip even opened a CD to meet the minimum balance). Clue Citibank: if you insist on people opening these things ONLY on the web, what’s the point of making customers also visit your branches TWICE to open the account? Never had a checking account take more than an hour to open in all my life until I met the idiocy at Citibank.

    I loved the 4GB ipod when they finally got around to shipping it (months later), but the fact $249 of MY money was on the line (for a $199 item) if I didn’t successfully navigate every fine print on their offer for the next year (13 months because of their delay) makes me welcome any money Citibank pays on this promotion. …If only to make them think through a system designed to take a month to open a simple personal checking account online.

  22. Beelzebub says:

    The issue here is what Citibank PAID (even if they were given a discount). If they purchased the iPods at $249.95, or a bulk rate based on $249.95, then this case has no merit — the value is established (even if the price has since dropped for other consumers). But if they started buying them at $199.95, then the case has a lot of merit, and SHOULD go on, as it could have implications in other cases that have similar circumstances, but different (potentially much greater) values. You can’t buy something for $199.95, then entice people with it by telling them its worth more than you paid.

    Of course, had Citibank bought them at $199.95, including a $50 gift card for iTunes and a cool note explaining the price difference probably would have prevented this whole mess. Lack of good customer service strikes again!

    And for the record, I think the class members are greedy bastards, but not wrong.

  23. WraithSama says:

    @bravo369:
    Unless, as someone mentioned above, the advertisement said that the equal-or-greater-value substitution clause takes effect only if the 4GB iPod Nano is unavailable. In that case, they delivered what was promised. It seems the details of the offer are being disputed, however.

  24. Beelzebub says:

    @ConsequencesIX: @ConsequencesIX: They are required by law to post the value of the promotional item.

  25. Krobar says:

    I got an iPod nano from Key for opening an account there a couple years ago. At the time the promotion said it was 1gb Nanos, then the 2nd gen came out and they sent us those instead. I was not upset at all to get a 2gb one :)

  26. @bravo369: imagine winning a contest for a brand new 2008 mustang. 5 years later, in 2013, they deliver you a 2008 mustang

    Yes, let’s all imagine a totally absurd situation so that your logic makes sense. First of all, it was 6-8 weeks and 1 generation later, not 5 years and 5 generations later. Second, your example would be be a little bit closer to reality with some slight modifications:

    Imagine winning a contest in 2008 for a brand new mustang. 5 years later, in 2013, they deliver you a 2013 mustang, but the price of a 2013 mustang is less than the 2008 one.

  27. @rdldr1: The only problem is that if they defaulted on the promotion, the customer will get $249 deducted rather than the actual value.

    Interesting point, but I think if that had happened that would be cause for a lawsuit.

    I assume Citibank would have been smart enough to only deduct $199, which of course puts us back in the gray area that this lawsuit’s exploiting.

  28. @Beelzebub: Oooh fair assessment. I like it. Can we get you a star?

  29. matto says:

    @Michael Belisle: You think they just hand those things out? The blog commenting industry is a bitter and cut-throat chaos. I nearly lost my house!

  30. spinachdip says:

    @Beelzebub: But think about it this way – by skimping on member benefits and still delivering the same product they promised, they saved themselves untold millions and insulated itself from the crisis than engulfed the rest of the industry. Or not.

    I agree with this assessment. It’s one thing if they promised equivalent or similarly equipped or something like that. But they specifically said equal or greater value. Citibank’s legal department should be kicking themselves for this.

  31. eelmonger says:

    It seems like this sort of thing must have come up before, items are constantly changing prices and contests and promotions are constantly being offered. If Citibank loses, couldn’t lottery winners start suing because inflation has decreased the effective value of their prize payments from the time that they originally won?

  32. B says:

    @eelmonger: Well, no, because the lottery winners are promised a monthly payment over a 20 year period. If the lottery was unable to deliver the money on time, and it took 25 years instead, then the winner would have a case, the same as this one. Incidentally, lottery winners are screwed over the inflation from their prizes, which is why you should always take the lump sum if you win.

  33. eelmonger says:

    @B: As I understand it, the case isn’t about time it took to receive the iPod (although that’s a factor), it’s about the fact that between being offered the iPod and receiving it, the item had lost value. Like inflation over 20 years on a lottery prize.

  34. Hogan1 says:

    @Smitty Werbenjagermanjensen: Agreed, I saw the ads for this, It stated a 4GB IPOD Mini. They got a 4GB IPod Mini. This is just the result of a gullible idiot or two and some lawyers who want to make some money. You can cry class action all you want, but in the end the only winners are the lawyers in these situations.

  35. Thank god for lawyers.

  36. B says:

    @eelmonger: Right, but the 20 year inflation is built into the agreement with the lottery. It wasn’t built into the agreement with Citibank.

  37. planetdaddy says:

    What kind of shit head bitches about something they get for free?

  38. B says:

    @planetdaddy: You do realize that Citibank saved $381,100 by delaying the payoff. That’s just off the 7622 customers in California. I imagine nationwide it adds up to quite a sum. So look at it this way, what kind of bank dicks around their customers to save 50 bucks? Pretty much every big bank, actually.

  39. Candyman says:

    People keep using the word free. It’s not. A promotional item is part of the transaction. You pay for it when you pay for the item or service the promotion is attached to. Free would be something given to you with no reciprocal obligation.

  40. RetailGuy83 says:

    What was the street price of a 4 gig mini (second gen) during christmas ’05? I bet they were going for close to $300 on ebay.

  41. fjordtjie says:

    frivolous lawsuit? yes. but legally i think citibank was obligated the $249 mp3 player as specified. worth a lawsuit? hell no!

  42. @eelmonger: it’s about the fact that between being offered the iPod and receiving it, the item had lost value

    I don’t think that’s even it. If they had delivered a first generation iPod mini, all would be well. That was the item promised. Just because Apple released a newer version in that time doesn’t mean you’re entitled to receive it.

    6-8 weeks is pretty common for fulfillment and Citibank is highly unlikely to have known that Apple was going to release a new mini when they planned the promotion: nobody knows that info in advance except Apple. They likely thought “Hey, we promised a 4 GB nano, and now the new 4 GB nano is $199. We just saved 20% on this promotion.”

    I’m pretty sure it’s a tricky situation and the side with better lawyers will win. My money is on Citibank. Even so, I agree that they should have either given out the 6 GB version or included a $50 iTunes gift card; I’m Just not convinced they were obligated to.

  43. farker says:

    I would find it plausible that Apple offered these up to any company willing to purchase them at a discount, because of the impending 6GB iPod Mini.

    However, at the time they were advertised, the MSRP was still $249, and that was the item that was ultimately delivered.

    Citi owes this “class” nothing, and I hope the complainants lose!

  44. msbxiv says:

    I signed up for this promotion in December 2004 when the 4GB iPod mini retailed for $249. When citibank sent the iPod, they sent a 2nd Generation iPod mini that retailed for $199. I went back and forth with CSR’s at citibank for over a week to no avail, and I gave up. If they had sent a 1st generation 4GB iPod mini, I would have have complained–that is what I signed up for. But when they sent a different player worth $50 less, that is when I started complaining. They would have charged me $249 if I had closed my account early, so why should citibank be let off the hook for providing a lower cost player in violation of the agreement?

  45. msbxiv says:

    The item that was actually delivered (a 2nd generation 4GB iPod mini) had a retail value of $199. It was never $249.

  46. wtfwtfwtf says:

    Sounds more like an attempt to make Citibank pay up a little more than just the value difference. Since the online bank accounts were not accruing any interest, therefore Citibank ‘floated’ on a promise that lost even more value when the more valuable iPods came out, but paid for the previous generation product, at a probably substantial discount. Hence the ‘breach of contract’.
    The $2500.00 in an interest bearing account or other ‘free bill payment’ services still wouldn’t have paid for an iPod of equal or better value within that one-year-in-effect use however.
    So in actuality, everybody won, but the lawyers want to draw blood/money no matter what.
    …but yeah, Citibank’s legal team needs to reschool themselves. :P

  47. Sockatume says:

    I find this pretty dubious, to be honest. The promotion only said that it may be substituted with another player of equal or greater value in the event of fulfilment issues, not that Citibank were obliged to provide a player equal in value to the 4GB iPod Mini.

  48. You guys have all made the arguments of the two sides pretty well, so I won’t rehash. In most jurisdictions, I am confident the bank would win–they delivered what they promised. In CA though, it’s anybody’s ball game.

  49. spinachdip says:

    @Michael Belisle: Actually, Apple’s product cycle is fairly predictable. Product releases are announced at MacWorld or WWDC, and new generations tend to appear around 12 months.

    Plus, I’m guessing Citibank offered these iPods as freebies precisely because it was nearly the end of the product cycle and they were available at steep discount. Obviously, the bulk discount on the newer generation iPods wouldn’t have been as steep, so “equal or greater value” ends up being “significantly greater value”.

  50. Rectilinear Propagation says:

    The only problem is that if they defaulted on the promotion, the customer will get $249 deducted rather than the actual value.

    @rdldr1: If the people in the lawsuit are complaining about that then I side with them. Yanking out more than the value of what they actually gave away is BS.

    Still, I’m surprised it actually said “equal or greater value” instead of “equal or lesser value”. Isn’t that how these things usually go? They could have put in that the value wouldn’t be less that X dollars in the tiny type.

  51. ARPRINCE says:

    @Corporate-Shill

    Thank god for lawyers.

    I agree! It’s a cause and effect. Without the lawyers, we get no lawsuit. No lawsuit, no consumerist post. No consumerist post, no discussion. Thanks to all lawyers!!!!

  52. Grive says:

    Ugh, I frankly find this lawsuit quite sickening. I don’t even care if the claimants are technically in the right here according to the letter of the contract. It seems they’re in the wrong ethically, IMO. They were promised a 4Gb iPod, they got a 4Gb iPod.

    @S3CT: Erm, but they claimed that the “equal or greater value” clause would only apply if there were fulfillment problems – and there weren’t. In any case, the post mentions that they “implied” the value of the iPod, not stated it directly.

    Bah, without the ad it’s all speculation.

    @Rectilinear Propagation: No, you get “equal or lesser value” when you’re allowing for the client to change stuff after the agreement. You need “equal or greater value” if you’re the one making the change.

    So, for example, if you give a coupon for a customer at a restaurant for, say, a New York Steak, and he decides to change it for a salad, you’d be alright. If he asks for a Lobster Thermidor – erm, that’s not quite alright.

    On the other hand, if you give him the same coupon but you happen to be out of steaks when he arrives, the correct thing would be to give him the lobster, since giving him the salad will be at the very least a poor customer service action which might lose you a customer, and at the very worst, an accusation of bait and switch.

  53. freejazz38 says:

    Here’s the REALLY sad thing. An Ipud is worth about 26 cents. ANY Ipud

  54. roadapples says:

    Ahh America, these people who filed this lawsuit are complete dipshits. And anyone defending there side is too.

  55. vladthepaler says:

    CitiBank did exactly what they said they would do, but they’re getting sued anyway? Argh! i hate to side with a giant corporation, but I hope CitiBank wins & the idiots suing them have to pay CitiBank’s legal expenses.

  56. jimv2000 says:

    So let me see. In the lawsuit the guy acknowledges that the offer was for a 4GB iPod, and if they ran out of iPods, then they’d give him some other player worth $250. But since they didn’t run out of iPods, I fail to see how the $250 comes into play at all. And if the promotion was over before the price drop, and he was just waiting for his iPod at that time, then that’s even dumber.

  57. jimv2000 says:

    @Rectilinear Propagation:

    “Still, I’m surprised it actually said “equal or greater value” instead of “equal or lesser value”. Isn’t that how these things usually go? They could have put in that the value wouldn’t be less that X dollars in the tiny type. “

    I don’t think that’s how it works with giveaways, or else they could just not have any iPods at all, claim that they ran out, and give everyone those little $40 mp3 players off Ebay.

  58. Beelzebub says:

    @spinachdip: I think you may be right on this — Citibank probably gt a GREAT price on the 4GB iPod BECAUSE it was going to drop in price. That makes sense to me, that the promotions/marketing department would make that move.

    Which in turn means that Citibank’s mistake would have been assigning the value at $249, when it was $199.

    Bottom line is, if they posted the value at what they paid, then they’re going to win. If they paid less and posted a higher value then it was really worth, then they are going to lose, and will end up having to pay the class the difference.

    After all this, this looks pretty cut and dry to me, and it will be interesting to see what arises in discovery, and how/what Citibank says they “paid” for the item.

  59. Beelzebub says:

    @Rectilinear Propagation: It’s required by law — in a promotion, you HAVE to give equal or greater value.

    “Equal or lesser value” means I could give you nothing.

  60. mike says:

    @Eldritch: The problem isn’t the iPod; it’s what the company agreed to do. This is a tricky one.

    On the one hand, you are right. They did get an iPod and that’s what they were promised (materially). But the value of the iPod went down when the iPod got in the hands of the people.

    It’d be interesting to see what would have happened if CitiBank sent the 4gb iPods as promised and then Apple came out with the upgrade.

  61. @spinachdip: Scan over the MacRumors buying guide. Sometimes the updates happen at MacWorld, sometime they don’t. Some time there’s a year or 6 months, sometime there isn’t. A subsequent update killed the mini and replaced it with the nano—and the 4 GB nano in 2006 was $249.

    They have been fools to expect to win on the Apple release schedule and product lineup roulette wheel. They might think they got lucky, but it was by no means guaranteed.

  62. @Michael Belisle: Ooops, that typo that changes meaning. I meant to say “They would have been fools to expect….”

  63. gjaluvka says:

    @shiznannigan:

    As lawsuits go, this is as weak as it gets. Regardless of your take on the technicalities of the storage vs. price, fact is it was a promotion and the recipients received a product substantially similar to what was expected, ie a 4GB IPOD mini. This lawsuit is a waste of the Court’s time.

  64. TMurphy says:

    Yes, it was the same item, but what if they waited so long that mp3s became the old format, and these iPods become obsolete, then handed them out; would they have a case over the depreciation of the offer over time in that case? If so, there was still depreciation going on here, so a similar line of logic may hold here.

    I’m not sure how offers like this work legally. While it seems somewhat frivolous for the consumers to bother with this, I don’t like the idea of letting big corps getting away with illegal profit mongering. If this was, in fact, a legal move, then I have no complaint with Citibank.

  65. Beelzebub says:

    Hey, does anyone know if the promotion stated the value as $249, or as a $249 ARV?

    Cuz’ if they stated it as an ARV, I wonder if that covers the Citi…

    @gjaluvka: On the surface, the lawsuit is weak, but when looked at closely, it’s the severity of the loss that’s weak — the case may very well have merit.

  66. Titan0 says:

    What an astonishing waste of resources. A waste of a salary for a judge, transcriptionist, security, etc. And a waste of time for a jury. Something’s gotta change in our system.

  67. Mr. Gunn says:

    There’s gotta be a correlation between ipod buyers and frivolous lawsuits.

  68. Geekybiker says:

    I think people need to stop think in terms of this promotion just being an ipod. They were promised an item worth $250 when they signed up. They were delivered a different item worth $200. It doesn’t matter that they are functionally very similar. They are different items and very different values.

    If I signed a contract to buy a 1200cc Harley and was delivered a 1200cc Yamaha instead I’d be upset even though the yamaha is a better bike.

    If they had delivered 1st gen ipods promised at the promotion start there would be no issue. Its up to Citi to worry about fulfilling their end of the contract, not the customer.