A federal court in New York has given the green light to a class action alleging that Best Buy violated its "price match" guarantee. Under the policy, the store guarantees consumers that it will match lower prices offered by local retail competitors. The lawsuit alleges, however, that Best Buy created an "anti-price-matching policy."
The suit, led by plaintiff Thomas Jermyn, describes the electronics chain's brazen effort to encourage employees to "build a case against the price match." Using internal Best Buy documents and statements by current and former Best Buy employees, the suit describes the methods by which Best Buy tried to convince customers that the guarantee didn't apply to their purchase.
An internal Best Buy memo, titled "Competition Insider Template," tells employees that the price match is disfavored and to be avoided whenever possible. The October 2006 memo sets forth the Best Buy policy that, when a customer presents a lower price from a competitor, "[w]e attempt to build a case against the price match.(Trust me, I've done it too)."
The "I" in that sentence is Best Buy employee Phil Bratton, a member of the company's Competitive Strategies group. According to growth partnership firm Frost & Sullivan, Bratton is no bit player; he serves (PDF) as Best Buy's market intelligence lead, where he oversees a team of competitive managers, considered Best Buy's "'eyes and ears' in the competition."
The memo gives employees a number of ways to convince customers that the policy doesn't apply to their purchase: the model numbers are different, the item isn't in stock at the competing store, the quoted price is from a warehouse (and thus subject to membership fees), or the competitor is "across town," just to name a few. According to the suit, however, none of these purported exceptions to the policy are spelled out in its terms.
Indeed, Best Buy's website promises consumers that, if they find a lower price elsewhere, "let us know and we'll match that price on the spot." The policy even offers a refund of the difference to consumers who already purchased the item at the competing retailer.
The suit is also bolstered by claims from Juan Ortiz, a former supervisor at three Best Buy stores in Connecticut. According to Ortiz, the store rejected over 100 bona fide price-match claims every week. In his order approving class certification, the judge also noted that, "Best Buy's own records reveal that the price match guarantee was applied inconsistently and 60 percent of customer requests to match warehouse club prices are wrongly denied."
The suit, brought on behalf of New York consumers, is being litigated by Michael Braunstein of Kantowitz, Goldhamer and Graifman. In a statement, Best Buy claimed that plaintiff Jermyn's price difference was in excess of $700, and that such "huge fluctuations" set off "red flags" for employees. However, when pressed, the company conceded that there is no set price limit on the guarantee.
Connecticut Attorney General Richard Blumenthal, who already has one suit pending against Best Buy, announced Monday that he may file another suit related to the price-matching scheme. Blumenthal's existing suit alleges that Best Buy maintained a separate website at in-store kiosks, in an attempt to deceive customers. The website looked like the company's standard page at BestBuy.com, but did not contain sales prices as the homepage did. When consumers clicked through to the store "Intranet" and found higher prices than they did on BestBuy.com, sales representatives would suggest that they had misread the price, or that the sale was no longer in effect.
The string of allegations could harm Best Buy at a time it appears to be riding high in the industry. Despite the dismal economy, Best Buy was the prime beneficiary of Circuit City's recent bankruptcy, and is now arguably the biggest player in consumer electronics. To stay on top, however, they will need to show that they aren't using their formidable position to manipulate consumers.