THE FEARLESS CONSUMER- Tricks 'R Us? Store delivers bundle of toy
Dave Weiss was so eager to get a Nintendo Wii at the $279 price Toys R Us had advertised that he lined up outside the store at 4am one Sunday in early December. When he got inside, however, he learned that to get the $279 price, he would have to buy an extended two-year warranty for $50. Reluctantly, he paid the new price and left with his Wii and its unwelcome add-on.
Weiss did some research, however, and learned that other stores around the country were making similar demands. In response to complaints about the tactic, supposedly, the corporate office had sent a memo to stores instructing them to revoke the policy. "Obviously," Weiss says, "the Charlottesville location did not get the memo."
Weiss called the local store to ask for a refund of the warranty and says a woman told him that if he wanted to return his Wii, "there were plenty of other people who would love to buy one." After that, on December 17, he emailed me his story. By the time I contacted him the next day, he had called the store "a couple more times" and was eventually allowed to return the warranty.
I forwarded Weiss's emails to Bob Friedland, public relations manager for Toys R Us, who said he would talk to the local store's manager and see what happened. While I waited for his call I did some internet research of my own, and learned that Toys R Us has also been accused of using this tactic in Chicago.
Chicago's NBC5.com reported on December 1 that the Better Business Bureau was investigating Toys R Us for illegal sales practices. One family that complained to the TV station's consumer team, Target 5, claimed that although a Toys R Us flier had advertised the Wii for $249, when they got to the store "a manager told them the system was tied to three extra games and an extended warranty for a total of $450."
Such sales tactics are a form of "bundling," which happens when a store advertises one price but then requires that customers buy additional items– usually an extended warranty or other merchandise– to get the advertised price. Bundling is a form of bait and switch, which is illegal.
I also learned that in 2001, Toys R Us was forced to settle a multistate lawsuit in which it was accused of bundling. As reported on the State of Delaware's website after the settlement– in which Delaware received $34,970– Toys R Us was alleged to have "conspired with manufacturers to withhold popular toys from low-margin discount and warehouse distributors capable of undercutting Toys R Us prices." By trying to force the manufacturers to bundle less-popular toys along with the more desirable, manufacturers would "either reduce or eliminate any potential savings they could otherwise pass on to consumers."
As part of the settlement, the court required that "damages paid to the states be distributed to educational programs and other programs that directly meet the needs of those most affected by the unlawful conduct, namely children."
It seems like that might have inspired Toys R Us, back in 2001, to make sure that such practices were stopped across the board, but reports such as Weiss's and the BBB investigation in Chicago suggest otherwise.
When Friedland called back to report his findings, he told me Weiss and other Wii customers had been the victims of "miscommunication at the store level." The local manager, he said, blamed it on seasonal help, and said that once he was aware of the situation, he stopped it.
But I've worked as seasonal help (I worked at Belk, which was then Leggett, during Christmas 1988), and I know that temporary workers are unlikely to dream up such things as "You have to buy an extended warranty for $50 to get the price in the ad." Friedland disagreed, however, and insisted the manager had been unaware of the policy.
Do you have a consumer problem or question? Email the Fearless Consumer or write her at 100 Second Street NW, Charlottesville, VA 22902.