Buy.Com Catches Flame Over Big Pricing Error
It’s been a rough couple of weeks for online retailers. E-Trade Group Inc. is facing at least one class-action lawsuit, after its computer system crashed four times and blocked many investors from placing orders and making trades. Online bookshop Amazon.com Inc. drew criticism for its practice of charging publishers for book endorsements--and responded by offering refunds to buyers of such books.
But the biggest news came from Aliso Viejo-based Buy.Com, the online retailer whose marketing slogan claims the firm has the “lowest prices on Earth.”
Over the weekend of Feb. 6, the company mistakenly offered users a computer monitor at far below its intended selling price. For 48 hours, a high-end Hitachi SuperScan 753 monitor, which normally retails for $588, was offered at a mere $164.50.
Word spread quickly on Usenet newsgroups about the deal. By Monday morning, company officials said, they had nearly 1,600 orders for the monitor.
In a statement, Buy.Com said it honored the $164.50 price for the 143 monitors it had in stock. It canceled all the other orders.
“Because of the number of products offered by Buy.Com (over 1 million) and the constant change in prices due to our low-price commitment, errors at times occur,” the company said.
“It was an unfortunate, honest mistake, and companies are allowed to make mistakes,” said company founder Scott Blum.
But Buy.Com’s decision has spawned a public outcry among angry customers, who are complaining about Buy.Com in such Internet newsgroups as alt.consumers.experiences and comp.sys.ibm.pc.hardware.video. Many have suggested a boycott of the retailer, which has attributed the faulty price to human error.
Consumers have also complained to the Better Business Bureau of Orange County, which has 46 recent complaints against Buy.Com.
Last Monday, the firm posted a new policy on the legal page of its Web site that addresses such mistakes: “In the event a product is listed at an incorrect price due to typographical error or error in pricing information received from our suppliers, Buy.Com shall have the right to refuse or cancel any orders placed for product listed at the incorrect price. . . . If your credit card has already been charged for the purchase and your order is canceled, Buy.Com shall immediately issue a credit to your credit card account in the amount of the incorrect price.”
Whether that disclaimer protects Buy.Com from legal liability is unclear, say staff at the Federal Trade Commission. Regulators note that such issues, which fall under state law, can become murky when applied to Internet firms that do business in all 50 states.
Some legal experts say that, despite Buy.Com’s assertions that it did not intend to deceive its customers, the company might have to fill the remaining orders at the lower price.
P.J. Huffstutter covers high technology for The Times. She can be reached at (714) 966-7830 and at p.j.huffstutter@latimes.com.
