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GameStop trade-in practices slammed: CA judge orders warnings for used games

The Northern California District Court has ruled that GameStop stores throughout the state must place warning labels on used games with content locked behind Online Passes or similar schemes. The company will also pay restitution to purchasers of second-hand titles affected by such restrictions.

The news comes after Senior District Judge Thelton E. Henderson approved a settlement between the company and legal firm Baron & Budd, who brought a class-action suit against GameStop for its second-hand practices. B&B alleged that the company was buying up used games at low prices then marking-up the titles to within $5 of their original value – even though Online Passes require customers to pay up to $15 to access some of the games' content (GameStop also sells Online Passes). B&B says this practice has allowed GameStop to make over $2 billion per year on used game sales alone, without paying royalties to the games' original publishers or developers.

Under the settlement, GameStop will now have to provide in-store and online warning labels for Online Pass-enabled second-hand games such as SSX and Mass Effect 3. The company will also issue rebates to buyers of such titles in checks and GameStop vouchers. Baron & Budd says it will post instructions for customers who feel they may be eligible for such a rebate on its Facebook page.

“if GameStop discloses the truth to consumers, it is unlikely that they will be able to continue selling used copies of certain games for only $5 less than the price of a new copy,” says B&B's Mark Pifko. “In fact, we already know that not long after the lawsuit was filed, GameStop lowered prices for used copies of many of the game titles identified in the lawsuit.”

While the settlement only applies to Californian stores and customers, Baron & Budd says it's investigating the chain's practices throughout the US and urges customers affected by the company's second-hand practices to make contact. B&B's contact details can be found at the firm's website.

28 comments

  • closer2192 - April 11, 2012 8:49 a.m.

    Why don't the developers/publishers make an easy way to return your game to them rather than to a retailer?
  • Darkhawk - April 11, 2012 7:47 a.m.

    I don't understand that photograph. Surely Gamestop hasn't purchased ad space on school buses?
  • brickman409 - April 11, 2012 11:05 a.m.

    i wouldn't be surprised if they did. the government of California is practically broke, public schools are selling ad space in schools just to pay for school supplies.
  • SentientSquidMachine - April 11, 2012 6:27 a.m.

    Gamestop is going to die a slow and painful death, as this new generation begins. I'm primarily a PC gamer, but I also have a PS3. Steam and Amazon will tag team, to beat Gamestop iinto submission. If you wait for a little bit, you will get any PC game on steam cheap. Sure I can't trade it back, but when I get GTA 1-4 for $12 ME1 for $5 and ME2 for $7.50, I can live with that "loss". I buy all of my PS3 games on Amazon for the same reason. It's always the cheaper option. All this talk of selling it back, just rent. Gamefly will also be kicking at Gamespots shins, bringing it down.
  • The_Boz - April 11, 2012 6:50 a.m.

    Problem with renting, you do not get to play the game at your own leisure. It took me 10 months to complete Forza 3, admittedly I left it for a few months as I got bored with it. I have been playing Forza 4 solid since last October, it is massive and already I have amassed about 425 cars and completed over 1000 single player races, not including online racing with friends. How is it feasible to rent this game? This is just 1 game for example. Renting is not the answer to more dedicated gamers.
  • Bones96 - April 11, 2012 11:22 p.m.

    Not all games are so long. I rent from GameFly. The majority of games are definitely rentable. GameFly is about $15 a month. A brand new game is $60. If you can beat the game within 3 months, its worth renting. For me, generally only some rpg's aren't worth renting. So I wait until the price goes down and I buy them or find a friend who has it. For people who don't have as much time to play, renting may not be a good idea.
  • The_Boz - April 11, 2012 5:31 a.m.

    If the XBOX 720 is looking to get rid of the used market, I will opt for a PS4. The reason I buy xbox games over PC games is that I can trade them in for a new game otherwise I may buy 2 games at the most a year. It is something that is helping many people to constantly buy new games, just like the car industry. If you buy a car a few months old, the manufacturer does not get a penny and the car could be sold a dozen times in it's life, and if it becomes a classic, could easily sell for more than it's original price. The thing though with games, many trading laws are broken, which is one reason I was glad to see GAME go into adminstration. You buy a 2nd hand game with "extra content" advertised on the packaging, by law you are entitled to everything that is advertised on the box when you buy it, there is no small print stating otherwise when you purchase it. The best way to combat the used games market and keep the industry going is to give passes and extra content free to the original buyer. If I buy a 2nd hand car, could be 5 years old if the warranty has not run out, I also purchase the warranty with the car which the manufacturer does not receive a penny. About time games consumers fought for our rights, stores like GAME have taken them away. If you buy a faulty product, opened it up, it doesn't work, you try and get your money back? They will say no, but by law they have to refund you, and not by store credit either.
  • wheresmymonkey - April 11, 2012 6:08 a.m.

    Urgh. Not that bloody car analogy again. It doesn't work. Games and Cars as markets have absolutelty no cross over other than you can buy both 2nd hand. Car manufacturers make lots of money out of second hand cars by selling spare parts at a much highter rate of profit than a whole new car. Game publishers/makers don't make a penny out of used games or rented games. well except for the passes now but it's understandable that they thought something needed to be done but its still a shady short sighted practice. In a few years time when the servers are shut off for the current crop of games they'll be tons of people out there unable to play the whole of a game because parts of it will be locked out through no fault of their own. But in a lot of respects the whole rise of the used market is the publishers fault in the first place for making their products so expense to retailers. the profit margin on new games is on average 5%-10% at best. that means for every new game a game shop sells they make a fiver. Now the mark up on used games is whatever the retailer wants. Therefore its the used business thats keeping them in business. they need it or they won't be making enough money to cover the cost of buying more new games. Much like most of the people that trade in games in the first place.
  • FoxdenRacing - April 11, 2012 11:59 a.m.

    Might be different where you're at, then... My local game store pays $15 or less for its $60-new games. Granted, idle time on the shelves will reduce profit margin, but it's not wholesale cost that's making new games a bad deal. If anything, used takes advantage of the 'buy in bulk' mindset. The "I went to the store for one $3 item...but they were on sale 10 for $25!", trumping up that $5 was saved rather than the net extra spend of $22. If I had to guess why used is so popular, it's that the $60 price tag is just too much. One doesn't need to look any further than the massive increase in volume whenever Steam puts something on sale to get some strong evidence in favor. Something needs to get done about the parasitic/symbiotic relationship between retailers and publishers, but I agree with you that all the current plans are shortsighted nonsense. I can't fathom the leap of logic to took to go from "Retailers are undercutting us with our own games!" to "I know! Let's go after the customers! That'll fix it!", let alone how someone able to make that leap gets into a leadership position at a billion-dollar company.
  • bob202021 - April 11, 2012 6:43 p.m.

    It's days like this you need to realise how lucky games-wise Americans are. Where I'm from (Australia) games regularly retail for up to $110AU. In the past this was sort of understandable due to the state of the aussie dollar, but now the aussie dollar is worth MORE than the US and yet the prices at many stores remain astronomically high.
  • The_Boz - April 12, 2012 3:54 p.m.

    I work in the car industry and you may like to know that not all parts are made by the manufacturer. This was contested in the courts last decade which the manufacturers lost on the grounds of competition. Genuine parts or parts of similar standard must be used where warranties are concerned, other than that, they don't have to be. The 2nd hand car market was 1 example, I can give you another if you like. 2nd hand furniture. How many people buy used bed frames and sofas? Practically every single assett bought from a badge to, well, an island really can be bought and sold a number of times and the original owner/manufacturer will not receive a penny from future sales. I bought a £500 mountain bike a few years ago, sold it recently, in doing so I didn't give anything towards the manufacturer and also took that person out of the market. Why should computer games be looked upon differently. I will be selling my DVDs on a car boot sale and many of my PC games too, not to mention clothes and household items. Should I just skip everything so manufacturers can earn money? Also 2nd hand shops, they are everywhere, you can put the same argument towards them also about taking profits from manufacturers pockets.
  • The_Boz - April 12, 2012 4:02 p.m.

    Just one other note, to quote you, "Game publishers/makers don't make a penny out of used games or rented games" who is to blame for that? And is that entirely true? Person A buys a game from a shop, get it home, plays it, gets bored, trades it in and buys a new game. Said game is resold to Person B. Person B goes online and buys DLC to enhance his experience. If this isn't happening, who is to blame? Manufacturers have an opportunity to sell the same content for the same copy of the game to various users. They can moan about it or embrace it and widen their net of users of their products. In the last 2 years I have bought about 15 games, and I have only done that because I have traded them in and put towards new games. If that wasn't an option, I may have bought 4 games in total over 2 years and not bought overated games like Shift 2 or very similar games as to what I have owned before like FIFA 12. The option of trading in gives me the option of keep buying new games.
  • radiodeaf - April 11, 2012 5:08 a.m.

    We need to stop thinking of used, as meaning something is wrong.. I buy used to get the same value out of it that someone else did...but without an unreasonable price that the publisher is trying to pawn off as being a must... the incredible profits these companies make is already staggering, yet because of bad choices on their part, mismanagement and just silly waste of their money on whatever new marketing scheme they come up with ,we are to blamed. The used game market gets demonized as the ultimate reason for some profit loss. WHAT? How is this allowable? Where is the common sense of the consumer. When has used been such a problem? In a industry of VHS...buying used must have killed of the VCR... it's the only reason it's gone. I think the music industries used market is actual reason they have such large profits but are in such "shambles". It's not piracy as everyone claims...but the used market. While I'm not happy with gamestop practices...can't blame them for needing to make profit, especially with the huge push for DLC instead of tangible product. They don't make much in money for consoles, hardware (controllers), and third party controllers. What's worse, the gaming industry should be embracing these companies. Try to push for a closer relationship. For many reasons I won't go into... TL;DR Used market is not the problem. Greedy, mismanaged, publishers... crap games cluttering the market, and ignorance of the consumers rights. These are what will hurt the industry.
  • radiodeaf - April 11, 2012 5:12 a.m.

    "What's worse, " meant to put the statement of having to purchase the games from the developers. Even the crappy ones. So basically EA makes the money. Gamestop would be losing money. Of course I didn't proofread and realized I my train of thought missed a whole sentence...ugh.
  • FaceEater - April 11, 2012 4:54 a.m.

    Just put whatever game you want on your Amazon wishlist. Watch the price drop to what you're willing to pay for it. Then you got yourself a cheaper game with all the fixins. So what if you play it a month or 2 after it came out? Still beats buying used with no Online Pass or 60 bucks hoping the game's good.
  • birdman1041 - April 11, 2012 9:57 p.m.

    Right you are. The Darkness II, release date February 7? Current price on Amazon: $29.99 (NEW) sixty days later.
  • gamemaster-plays - April 11, 2012 12:27 a.m.

    yeah but as a consumer i always want to have options help me to decide what item to purchase, if a game is 5 dls lower than a new one price so its and affordable price to choose, online passes dont liked very much, its a filthiest way to ensure a customer play the game for the issuer and use a brand new one, but i bought some used games from two years and dont need online pass, this is a new implementation from companies to avoid buying used, why i can't buy a used game? that was paid for, the company has been remunerated with the sells around the planet, so the game so the game, if its mine i can selling it on ebay or whatever store i found to get some money to buy guess what: more games. these practices will lead us to a economical collapse for videogame industry. Regards
  • DLH570 - April 10, 2012 11:13 p.m.

    Why is everybody condemning GameStop? It's not their job to educate the customer. Their job is to sell products to the customer. They can't be held responsible for the stupidity of consumers. If a customer doesn't already know about the recent "online pass" trend, he deserves to get ripped off; he'll learn about it the hard way. You should be knowledgeable about something before you spend money on it.
  • WINNER: Dark Souls - April 11, 2012 4:41 a.m.

    What about the parents who don't know sh!t about the games they buy for their children (and don't really care to know). If i was a parent and I bought my child SSX for $55 used, then found out my child was upset because now we have to spend another $10 or w/e it is to get the online content unlocked, then i'd be pretty pissed. Gamestop is evil, dude. They're the reason why we don't have games as good as they were back in the day. Gamestop reaps the earnings that (at least a percentage) should go to the developers and publishers and in return, we don't get huge, innovative and fresh games. Instead, We get Call of Battlefield: Modern Creed of Uncharted Fantasy 15.
  • mockraven - April 11, 2012 6:28 a.m.

    "The parents who don't know sh!t about the games" are the reason why ESRB went to court a year or two back. Those parents were buying M-rated games for their kids and then got upset about the violence, language, sexual situations, and so forth. Lo and behold, "Brown v. Entertainment Merchants Association" came about. It's the parents' responsibility to be informed for the sake of their children. As to the Gamestop bit, my store always informed me if I was buying a used game that required an online pass in order to play and would explain what that meant. Then again, my store also didn't remove the Deus Ex: Human Revolution Onlive pass, either -- the cashier said something about "didn't get the memo." As for why games aren't "as good as they were back in the day," that's due to a lot of reasons. COD and Guitar Hero fell into "it sold well so let's get another out no later than next year!" Then there's budget, amazing graphics vs content, what games are already popular and thus emulated, etc.

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