Best Buy Sued By Ohio

liryon writes "The Register is reporting that the state of Ohio has sued national electronics retailer Best Buy for misleading customers by repackaging used goods and then selling them as new, and for failing to pay rebate claims. The Register report can be found here, and the original story is here. I guess this is what you get for deciding the customer is not always right." See also the Ohio AG's press release.

Comments

The bigger picture

[maximilln]

It certainly is fun to cheer when a big company gets handed a rebuke but let's look at who really pays and who really profits.

Who pays:
1) This isn't going to come out of the personal bank accounts of the people who sit on the executive board. This isn't going to come from the personal bank account of the CEO or VPs.
2) This will probably result in belt-tightening budget cuts which will translate into more money spent on marketing and less money spent on in-store jobs, promotions, or yearly bonuses.
3) This will probably cause Best Buy stock to hiccup which will impact people nationwide as their investments and retirement accounts pay.
4) Best Buy probably has business lawsuit insurance. The insurance company will not be happy about covering the bill. The only way for the insurance company to shore up their profit will be to raise rates on other insurance types: homeowners and car insurance are always beautiful targets as it's a larger base to draw from meaning less raise per policy and a general lack of resistance from the population.

Who profits:
1) The attorneys profit. Whatever settlement the court gives to Ohio the lawyers will take at least 33% of that right off the top.
2) The CEO will profit. The executive board will profit. The insurance company will profit. The VPs will profit. The investment bankers and stock brokers will profit. Companies holding distribution contracts with Best Buy will profit.
3) The customer will not profit. The citizens of Ohio will not profit.
4) Even if one-time disbursements are made to customers or citizens the company is 100% confident of making that back just like any casino which offers promotional packages.

In the end the politics inside Best Buy will use this as an excuse to axe the least favorite VP, replace the two least favorite executive board members, and as an excuse to raise the average price of a CD $0.10 to cover the losses.