GameStop Reviewing Their Sales Policy in Light of Kotaku Story

GameStop today confirmed that they are reviewing their lending and sales policy to see if it may be a violation of trade practices, GameStop officials told Kotaku today.

"We are looking at a series of things," said said Chris Olivera, vice president of corporate communications for GameStop. "We want to understand the assertions that were made by the FTC and we also want to see what is actually happening in the stores that led to what you wrote about."

According to a number of GameStop employees and managers across the country, all of which spoke to us on the condition of anonymity, new copies of games rented out to employees are often mixed in with the unplayed display copies. And both are sold at "new" prices.

Olivera declined to outline GameStop's employee check-out policy to Kotaku today, but said that the company is looking into whether the practice of selling games that had been checked-out by employees as new is "something isolated or is something that is a practice within certain locations." He added that the FTC has not been in contact with GameStop.

"We are looking at policy and practice," he said.

According 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.

Olivera said he would comment on the conclusion of the corporate review as soon as it wraps up.