Law of the Game: GameStop Practice Appears DeceptiveS

Legal game site, Law of the Game, has weighed in on GameStop's policy of selling games they let their employees play as new, unplayed, titles.

Mark Methenitis, an attorney at Dallas-based The Vernon Law Group, says that there is both a legal and pragmatic approach to the answer of whether the practice is illegal.

"From a legal standpoint, ignoring any pragmatic analysis, it certainly seems that way from the letter of the law. Certainly, it's something the FTC could investigate, but more practically, it may be a matter for state deceptive trade practices law. In Texas, for example, it is a deceptive trade practice if you are "representing that goods are original or new if they are deteriorated, reconditioned, reclaimed, used, or secondhand."

That matches up with our research on the subject and interpretation of the FTC rules as it applies to GameStop. We think that the retail's behavior would violate the FTC Act (15 U.S.C §§ 41-58). If so, the FTC could issue an injunction and/or fine Gamestop.

The FTC Act Test for false advertising states that there must be a representation, omission or practice that is likely to mislead the consumer. Second, the FTC examines the practice from the standpoint of a reasonable consumer. Finally, the representation, omission, or practice must be a "material" one (whether the act or practice is likely to affect the consumer's conduct or decision with regard to a product or service).

In GameStop's situation, it sounds like the employees have mislead the customer by representing that the game is new and omitted the fact the game has been used. A reasonable customer would not pay full price for a used game; the representation or omission would affect the customer's decision; and therefore, the representation or omission is material and would constitute false advertising.

In his article, Methenitis goes on to point out that the law doesn't exist in a vacuum, adding that he's not sure that GameStop is as nefarious as many people seem to think it is.

His conclusion? Why doesn't GameStop just use reproduced cover art instead of gutted games for display purposes? That would do away with the need to open games. Of course, it would also do away with one of the biggest fringe benefits that GameStop employees get: Free game rentals.

If you're interested in the issue, and not just endlessly arguing about it, Methenitis' well-reasoned story is worth a read.

It's also worth noting that in 2003, GameStop reached a national settlement in a class action filed against them for reselling games that had been purchased and then returned, as new. The practice was deemed a violation of state consumer protection law.

GameStop's Employee Checkout and Deceptive Trade Practices [Law of the Game, thanks Mark]

Thanks to Jesse Ma for additional research for this article.