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.

We've been testing a trade-in program for a few months now. When we are convinced that there is sufficient consumer demand and the customer experience is highly robust, we expect to make it available to all our members.

GameFly testing pre-played trade-in program [Joytiq]

1. Nearly 50% of all console game renters didn't purchase a single game they rented last year.
2. Only 9% of renters bought 11% or more of the games they rented.

In short: if you rent a game, you don't buy it. But who ever bought that whole "try before you buy" argument, anyway? Though I will admit to keeping a few games from my monthly mail rental service of choice.

Game Rentals Eating into Purchases [via maxconsole]

With all those different models and different consoles out there, it sure is difficult to keep everything straight. That is, if you don't really give a hoot. Kotakuite Ophiuchus was walking past his local game retailer somewhere in Great Britain, when he stumbled on the above advertisement for 360 games that features an original Xbox controller. Would that be considered backwards compatible, forwards compatible or something else entirely? Brian Ashcraft

I was walking through one of the halls when this little cherry-red number caught my eye. I do a fair amount of damage to the CDs that have the misfortune to end up in my car, so a better disc repair device than the hand-cranked jobbies seemed like a good idea. Then I saw the price: $995. That's a lot of copies of Dark Side of the Moon.

Turns out there's a big market for professional-level disc repair. All the DVD and game rental shops, all the used CD stores, all the video game stores give you five bucks off a game if you turn in eighteen, they need to at least try to get the ferret claw marks out of the poor abused discs you turn in. The "Disc-Go-Devil," as it's called, is actually one of the lower-end professional machines. DiscGoTech makes massive disc repairing monsters that can clean up to 225 discs an hour. Our scientific simulations say it would take over two thousand stoners with hardwood floors to screw up discs at that rate.

DiscGoTech [Official Site]

Just noticed that GameFly has started to get a wee bit annoyed about their rented Xbox 360 games coming back all scratched. According to Gamasutra, the company has started sending out form letters to people who return a damaged Xbox 360 game:

We have received reports that certain XBOX 360 consoles have caused damage to GameFly videogames. Unfortunately, we have been notified that you recently returned a damaged XBOX 360 game.

As a precaution, we have removed all XBOX 360 games from your GameQ. Please contact Microsoft at 1-800-4MY-XBOX. Please do not rent XBOX 360 games until you have resolved this issue.

In the future, should GameFly receive XBOX 360 games from you that have been damaged, you will be charged a replacement fee.

That can't be good, has anyone has similar experiences with other game rental services?

GameFly Rental Service Relays Xbox 360 Disc Scratching Problems [Gamasutra]