May 25, 2007, 12:00 AM

Connecticut AG charges Best Buy with ‘Internet bait-and-switch’

Connecticut Attorney General Richard Blumenthal has filed a lawsuit against Best Buy alleging the retail chain used in-store computer kiosks to deceive consumers about product prices and overcharge them. Best Buy “adamantly denies” the charges.

Connecticut Attorney General Richard Blumenthal announced a lawsuit yesterday against Best Buy Co. Inc. alleging the chain used in-store computer kiosks to deceive consumers about product prices and overcharge them. Blumenthal called the retailer’s actions “an Internet version of bait-and-switch.”

Best Buy denies the charges, attributing a “small percentage” of over-pricing instances to store salespeople’s misunderstanding of the difference between in-store kiosk prices and online pricing.

At issue are prices that were listed on kiosks in Best Buy stores, which Blumenthal charges were higher than those posted on the electronics retailer’s web site, BestBuy.com. The suit alleges the kiosks are “virtually identical” to the web site, apart from the pricing, and that store customers access information by clicking a tab labeled BestBuy.com even though they are not connecting to the web site.

Blumenthal, who brought the suit with Connecticut’s department of consumer protection, maintains that Best Buy store salespeople told consumers searching for or seeking to confirm lower online prices that the kiosk connected them to BestBuy.com. When the site displayed the higher in-store price, salespeople allegedly suggested that consumers, who thought they were viewing BestBuy.com, previously misread the lower online price or the online price had expired. Since 2005, the company’s stores have pledged to match any lower online price, including those posted on their e-commerce site.

“Best Buy gave consumers the worst deal-a bait-and-switch-plus scheme luring consumers into stores with promised online discounts, only to charge higher in-store prices,” Blumenthal says. “The company commonly kept two sets of prices, one on its Internet site and an often higher set on its in-store, look-alike, available on kiosks.”

Best Buy declines to comment, but issued a statement today explaining its actions and denying the charges. The kiosks aimed to provide in-store customers with a source of product information and inventory levels at specific stores, the company says.

“We used the same web site platform for these in-store kiosks as we did for our national web site–we did this to ensure that customers familiar with the national web site could easily navigate the in-store kiosk. Unfortunately, for all the benefits that the kiosks provided to most of our customers, there was a small percentage who did not receive the best price when they should have. Once this issue was brought to our attention, we provided immediate training for our employees to help ensure that all customers received the best price. We are in the process of making changes to eliminate future confusion,” Best Buy says.

Best Buy is No. 11 in the Internet Retailer Top 500 Guide.

In March Best Buy added a banner to its in-store kiosks stating “This Kiosk Reflects Local Store Pricing,” Blumenthal says, but the kiosks remain deceptive. The kiosk’s appearance remains virtually identical to BestBuy.com, he notes. “The store’s minor changes to its kiosks-made in response to my investigation-are inadequate and incomplete,” Blumenthal said. “The in-store kiosks are still mislabeled ‘BestBuy.com,’ falsely leading consumers to believe they are connecting to the Best Buy Internet web site.”

A letter to Best Buy shoppers posted on the company’s web site in early March explained the purpose of the in-store kiosks, including product and services comparisons, access to products available only online and out of stock notices. “To keep things simple, these in-store kiosks reflect the prices found at the local store-not the prices found online-because online prices are often either higher or lower than the prices found in the store (a common practice in retailing),” the letter said. “We do offer price-matching to our national web site in the stores. Not all companies offer this, but our customers asked for it, and we felt it was the right thing to do. This in-store price-matching should, however, be conducted following a well-defined process and should NOT be conducted using the in-store kiosks. But we have learned, unfortunately, that this process has not been followed consistently,” the letter said.

Best Buy’s letter acknowledged the need to better train employees on price-matching policies and procedures. “We also are revisiting how our employees and customers interact with our in-store kiosks and BestBuy.com,” the letter said.

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