A pricing error at Sears.com last Friday resulted in iPad 2s going on sale for the low price of just $69. Not surprisingly, a virtual stampede of would-be dealsters soon rushed to make good on the offer… but now they’re hopping mad, as Sears makes clear that they will not be honoring the offer.
MacWorld has the full report, but here’s the overview:
Last Friday on Sears.com, a third-party seller called GSM On Sale offered two iPad 2 models at astounding prices, according to several media reports: the 16GB, Wi-Fi-only model for $69 (Apple lists it for $499), and the 32GB, Wi-Fi-only model for $179 (versus Apple’s $599 list price).
It’s not clear how many customers placed orders. But it is clear that however many there are, they are plenty upset about not getting a $499 product for $69…
It didn’t take long for GSM On Sale to catch the error and notify Sears, which posted a very brief apology on its corporate Facebook page by 8:42 p.m. on the day the ad appeared: “Unfortunately, today one of the Marketplace third party sellers told us that they mistakenly posted incorrect pricing on two Apple iPad models on the Marketplace portion of the website. If you purchased either of these products recently, your order has been cancelled and your account will be credited. We apologize for any inconvenience this may have caused.”
Not too surprisingly, customers who tried to purchase a $69 iPad 2 are now screaming bloody murder, claiming false advertisement.
I’ve got to say, I’ve got little sympathy for the people who didn’t get a $69 iPad 2 here. No one is selling iPad 2s for significantly less than $499: a $69 iPad 2 is clearly an error. To get indignant because you tried to take advantage of someone else’s mistake and then got caught at it seems a little much.
That said, there does seem to be reason to criticize Sears here. Though Sears was quick to deduct the $69 or $179 from users’ accounts, they’ve so far been extremely slow to refund the money.
What do you think? Should Sears have honored this pricing error? Let us know in the comments.
John Brownlee is a writer for Fast Company, and a contributing writer here at CoM. He has also written for Wired, Playboy, Boing Boing, Popular Mechanics, VentureBeat, and Gizmodo. He lives in Boston with his wife and two parakeets. You can follow him here on Twitter.
69 responses to “$69 iPad 2 Sale Causes Online Stampede, But Some Things Are Too Good To Be True”
I didn’t have too much sympathy for the buyers either but if Sears didn’t put the money back when they sent the cancellation email then I have a different opinion. I am almost to the point of Sears needs to honor it.
Yes, when is the last time that you went to a store and they didn’t sell you something based on the advertised price? I caught a great deal last year with MLB.TV where they made a similar error ($20 instead of $120) and they honored it.
Yes, when is the last time that you went to a store and they didn’t sell you something based on the advertised price? I caught a great deal last year with MLB.TV where they made a similar error ($20 instead of $120) and they honored it.
This is known as the ‘bait and switch’ and is considered fraud. If Sears doesn’t verify their data before they publish, then they made a mistake and need to honor it. Otherwise why did I give them all my information? Will they also delete my email, phone, and mailing address? Will they also not send me ads in the future? Seems this sets a precedent to advertise something just to get peoples personal information then say it was a mistake and not ‘pay’ for the info.
Here in Canada if a retailer displays an incorrect price they are required by law to sell the item to the customer at the lowest advertised price. So if Sears advertised$499 in a brochure and $69 on the website, by law they would be required to sell it for $69.
I think that Sears should give them the $69 off the original price IF the customers still want the iPad. If not, refund the money. I agree it was an accident. But come on, you can’t expect to get something for nothing. Remember the PS3/Target pricing mess up. Companies make mistakes, and I don’t think they should be forced to give the customers even that discount. But it would be a good way to at least quiet the natives.
I think Sears has missed a huge opportunity for customer goodwill. When Target accidentally sold PS3s at a huge discount (total cost of $50 or something) they didn’t honor the purchases. Target’s store pushes through to Amazon, though, and Amazon was quick to pounce on an opportunity to show goodwill with customers and filled any orders placed through their website – out of their own supplies.
Companies that say, “Oh, that’s our fault but we’ll honor the listed price” see a huge amount of customer satisfaction and repeat business.
If they’re not going to honor the prices, they should have issued refunds immediately. Pretty simple stuff there.
In store, they’ll honor mistakes. But that’s on a much smaller scale. One person getting an iPad for $70 wouldn’t have been as bad as the hundreds that probably ordered this online. I could see why they wouldn’t honor the mistake, but they should know that it may have lost them some customers in the long run.
These “customers” (idiots) get no sympathy from me. If the mistake was NOT obvious, e.g. iPads were advertised for $350 rather than $499, then I may have some sympathy for these people, but the mistake being so obvious, nearly as obvious as the fact that Sears won’t honor the mistake, makes these customers look ridiculously stupid for trying to take advantage of Sears.
From what I can tell Sears wasn’t actually the ones selling them (they are not authorized sellers from what I can find). This seems to be more like Amazon Marketplace where you are dealing with another party.
That said, they could have always claimed that they sold out and were refunding orders they didn’t have stock for. How likely is it anyone would figure out that all the orders were ‘sold out’
This wasn’t Sears selling them. It was another party allowed to ‘marketplace’ through their site. In such cases, the rules are that the other kids are responsible for making sure the right info is there. Which they screwed up, which they told Sears (along with saying they wouldn’t ship any of the orders) and Sears is the one paying for the bad will.
find proof that they didn’t initiate the refund when they sent the email. Perhaps they did and it is the banks that are holding it up with all their rules and protocols.
this is OLDDDDDDDDDDDD news…
slow news day on cult?
Consequently, COMPANIES don’t make mistakes. The PEOPLE running the companies make the mistakes. People should be held liable for their actions, regardless of their liability.
When ever in doubt it is the retailer’s fault. I have learned this from working in a retail organization for more than 20 years. In many states when an item rings up at different price than it was marked the item is free to the customer. Now we all know the Internet does not play by these rules but that does not mean Sears is not liable. If you are broker for other deals from other manufactures then you better step your game up. As for miss priced product. If there is no disclaimer regarding mis-priced items the consumers should get the product for what they bought it for especially since the retailer already charged the accounts. In this case the purchase was made and legal tender was exchanged for the deal. According courts the deal was done. The only way Sears should be allowed out of the deal is if an out-of-stock conditioned existed. We can blame the consumer but the Internet is full of crazy deals, yes this one seems too good to be true but it still was a published deal. They accepted the tender and completed the transaction. If anything this hurts the creditability of Sears and their so called marketplace.
Yup, they should have honoured it. It would (almost certainly) have cost them under $100k (230+ orders), and it would have generated much, much more buzz, goodwill, and positive publicity than any other $100k advertising expenditure they will ever make.
Lets just keep passing the buck…
In Germany courts have decided that this is not “bait and switch”, since any informed customer could see immediately that this was most likely an error. Nobody requires businesses to be perfect while customers can be total morons at the same time.
So a customer claiming that he didn’t realize that this was an error and at the same time demanding that Sears mustn’t ever make a mistake is actually fraudulent, trying to abuse the business-customer relationship to gain an unfair advantage for themselves.
This only applies if the error is considered to be obvious, so a 10% or 20% discount would probably be accepted by a court as possible and the seller be forced to grant it.
It must be nice walking through life never having to say “oops” or “I’m sorry.” Accountability is one thing when it matters, but nobody is going to die as a result of not getting their $69 iPad. Suck it up and deal people… someONE made a mistake. It happens.
Reminds me of near Christmas, I think it was Target selling the Sony Playstation 3 for $40. I bought two, never showed up :\
I hate to break this to everyone but they are required to honor the price of the merchandise they are selling. It’s not the customers problem that someone couldn’t do their job correctly regardless of it being a third party vendor or not. For all of you saying they shouldn’t take advantage of the situation, they purchased and paid for a product at a certain price and they have the right to that product.
This is NOT “bait and switch.” There is no “switch.” If you are going to accuse a company of fraud, you MAY want to get your terms correct.
The problem is the contract of sale. While the ad for the iPad is only considered to be a solicitation for offers, the actual order and subsequent acceptance of payment creates a binding contract of sale. There was an offer (“I’ll take the iPad you’re offering for only $69!), an acceptance (“Please check out and pay the money”), and consideration (the actual payment). Had Sears or its agents (the exact who is irrelevant to the principal) advertised the product and then refused to sell it, they’d be OK, but one can’t take people’s money and then refuse to deliver, the actual sale is over with.
To begin with, we always sell something for more than it is worth to us. Spacely Sprockets sells a sprocket for $1 because the company would much rather have the $1 than the sprocket. Thus, the sprocket must be worth less than a dollar to Spacely. The buyer of the sprocket would rather have the sprocket than the dollar. Again, the sprocket must be worth more than the dollar to the buyer.
Thus, to simply refund the money doesn’t make the buyer whole. They had something of greater value to them (arguably something less than the $499 Apple sells them for or they’d have bought one from Apple, but clearly more than $69).
Moreover, Sears isn’t the one who gets to decide the remedy. That is for the party who is not the dirty, rotten breacher, as my contracts teacher would put it, to decide, not Sears. The buyers could well demand delivery, known as specific performance, as the acceptable remedy. Orders for specific performance are granted when damages are not an adequate remedy.
What Sears wants to do is rescind the contract, but mistake is not a reason for rescission. Typically, rescission will be permitted for fraud in the making of the contract (for which there isn’t any such allegation in this case), for a breach substantially defeating the contract’s purpose, or if the contract is legally invalid (such as a contract with an incompetent person). Each party of a contract is assumed to know what they are doing.
Thus, whatever our sympathies, I think the law sides with the buyers in this case.
Actually, “they” are NOT “required to honor the price of the merchandise.” An advertised price is only considered to be a solicitation for an offer. An offer can be refused. An item may be advertised for a price and the merchant may decline to sell it at that price.
However, once the merchandise is SOLD, the question, and, therefore, the answer, is radically different. See my discussion below.
I should probably add that in Germany (and Europe in general) the courts assume that everybody knows they are required to apply common sense. So if you act stupidly, you cannot really blame it on anybody else.
I don’t know if it is a modern myth, but there is a story about someone in the US successfully suing the maker of a chainsaw for not mentioning in the manual that he shouldn’t stop the circling chain with his hand. In Europe not only would the chainsaw maker be off the hook since it is obvious that one should never try to do that. The health insurance might even refuse to cover the costs, since the user willingly endangered himself. They do not cover (all) the medical cost if you e.g. get injured while doing some extreme sports considered very dangerous.
So a court in the US might even decide against the seller in this case. Both models have some advantages (US: forcing the business to try very hard to keep harm from even the most moronic customer; EU: teach people they actually have to use their brains or else face the consequences of not doing so.)
First of all, the refunds have been given out. as for the “Hopping Mad” part, it is not legally binding until a Bill of Sale is created. False Advertisement doesn’t really count since it was a error and since the customers weren’t charged for the item.
Except for the fact that Sears rejected the terms of the contract. Take a more formal contract such as buying a house, even though you make a full priced offer on the house it is not guaranteed that you own that house until the selling party accepts. Here the $69 offer was rejected.
Sears did not reject the offer. They accepted it and did so by taking the money for the sale. The contract is executed by action, in this case. The buyer offered $69, Sears accepted by taking the $69. We have offer, acceptance, and consideration. Sears is trying to back out of the contract by returning the money. If Sears had rejected the offer, it wouldn’t have the customer’s $69 to refund.
To use your house analogy, I offer Ms. Hubbard $69 for her shoe house and she cashes my check for the full $69, she has accepted my offer by action. If she had not cashed the check, we’d have a different matter, but both Ms. Hubbard and Sears converted the debit instrument into cash in their own account, thus accepting the offer. Otherwise, anyone who wished to get back a house they sold would simply have to give the new owner back the full purchase price.
No one rejects an offer by cashing the check or debiting an account.
no, up to $10.00 the first item is free, after that, it’s ten bucks off the mistaken price in the customer’s favour.
I don’t know of any common law rule or statute that requires the creation of a bill of sale, let alone for a contract to become legally binding until the creation of one. The “false advertisement” is not the problem. The problem is Sears took the money. Once they have accepted the money, the offer to purchase is converted to a contract through acceptance by action. Refunds don’t count either. Sears accepted payment. At that moment, they owed the buyer an iPad.
blah, blah, blah, a contract is only valid if there is a meeting of the minds.
69 is a naughty number you see.. such a tease ..lol
I same here amazon was quick to punce on an opportunity to show..
If they’re not going to recognize the costs, they ought to include issued refunds instantly.
online shopping website
Sear’s as any business needs to consider the real value here… it is not the $400+ dollars that they are loosing. This has probably resulted in losses much greater. I am willing to be that the lifetime value of each ticked off customer far exceeds that amount, therefore it should be honored.
No, it is clearly a mistake, however, they should offer them a discount of $50 if they want to continue with their order.
Any advertisement is an invitation to treat. Seller can put any price they want in the advertisement. The buyer is the person you makes the offer and its up to the seller to accept it. Thats law of contract. In this case many offer 69 something which is too good to be true and seller rejects.