Best Buy's iPad Dilemma: The Tricky World Of Shipping Errors
Attorney Mark D. Rasch is the former head of the U.S. Justice Department's computer crime unit and today serves as Director of Cybersecurity and Privacy Consulting at CSC in Virginia.
Best Buy this month was in the news for apparently shipping five iPads to at least two customers, each of whom had only ordered one. The chain decided to get some good press for a change and encouraged the customer to "keep the additional iPads and give them to people in need."
Some news stories, having picked up on a published U.S. Federal Trade Commission (FTC) Q&A, said that Best Buy wasn't being generous, that federal law required that the consumer could keep the extra iPads and not pay for them. Like almost all matters legal, the truth is not quite that clean. The laws referenced are intended to punish retailers from shipping items to people who bought nothing and then trying to force them to pay. A shipment in error—especially one to a legitimate customer—was never envisioned, nor was accidentally sending a larger quantity of that which was legitimately being purchased.
Side note: Would homeless people really benefit from an iPad, especially one that has no receipt? Maybe selling them and giving away the cash would be a better idea, but I digress.
The accurate-but-contextless FTC posting in question asked the question "Am I obligated to return or pay for merchandise I never ordered?" and it answered "No. If you receive merchandise that you didn’t order, you have a legal right to keep it as a free gift."
Indeed, both the FTC and the U.S. Postal Service have laws and regulations that relate to consumers' obligation to pay for goods that they received without solicitation. The U.S. Postal Service also notes: "A company sends you a gift in the mail: a ball point pen, a key chain, a tie. But you didn't order it. What do you do? If you are the type of person this company is looking for, you may feel guilty about accepting the item without paying for it. Don't feel guilty! It's yours, and you are under no obligation to pay anything."
A federal statute (Title 39, United States Code, Section 3009) provides that a consumer need not pay for unsolicited products, and that a company cannot send such unsolicited products unless they are either free samples which are clearly and conspicuously marked as such, or merchandise mailed by a charitable organization that is soliciting contributions.
But here comes the rub: The statute defines unsolicited products as anything you didn't order. So in the Best Buy case, the four iPads that the customer did not order are "unsolicited" and therefore completely the customer's to keep. So when Best Buy told its consumers to keep these products, they weren't doing anything more than what the law required. Right?
Not so fast. This is one of the times that you have to look beyond the literal wording of the statute or regulation, and in particular the wording on a webpage defining or describing that statute and regulation, and look at the purpose behind the regulation.What both the Federal Trade Commission regulation and the Postal Service law were designed to deal with was a practice that was common many years ago of companies sending consumers samples of their products together with the bill for the product. In that case, the products were truly "unsolicited" and the consumer never ordered them and never wanted them. If the consumer didn't pay for the items sent, the merchant would either continue to bill on, or open the collection action for, the market value of the products "sold."
Because there was never any contract for sale, the products were never sold, and the process of sending somebody in unsolicited product and the bill for that product constituted a false, fraudulent, and deceptive trade practice. It was this kind of behavior that the Federal Trade Commission was attempting to prohibit. Similarly, the U.S. Postal Service regulations were designed to deal with the same problem.
Partially to punish companies that engaged in this deceptive practice, and partly to take some of the rewards out of it, many states and the federal government passed laws that said that the practice was unlawful, and that consumers did not have to pay for items they did not order. But that's not what happened in the Best Buy case.
In the Best Buy case, the consumers did in fact order products from the merchant. The merchant simply delivered the wrong quantity of the items. We can imagine all kinds of other "mistakes" that a merchant could make including sending the wrong product, sending the wrong quantity of the product, sending the product to the wrong person, or sending multiple shipments of the product. In those cases, both the legal, and moral, and ethical thing to do from the point of view of the consumer is to simply ship the product back. From the point of view of the merchant, you should make it as easy as possible for the consumer to do this. Thus, a consumer who receives a shipment in error (as opposed to a consumer who receives an unsolicited shipment) would likely be required to return shipment.
The merchant should offer to have the product picked up, or provide a return shipping label to the consumer, and should compensate the consumer for his time and energy required to fix the merchants mistake. If the merchant doesn't provide a mechanism for the consumer to easily and efficiently send the product back, depending on the value of the merchandise, the consumer would be within his or her rights to simply keep the product.
This is all by way of saying that in this area of the law, like almost every other area of the law, the rules are not particularly clear. The postal statute definition of unsolicited item is so broad that it would include an item shipped erroneously. But obviously that's not what the statute was intended to deal with. What if Amazon or Walmart.com has a legitimate order for a $150,000 diamond necklace and it charges the customer's credit card but it accidentally ships it to the wrong customer. Does that recipient have a right to keep or sell that necklace?
Best Buy probably didn't need to allow the customer to keep the four other iPads. But it was a good business decision to allow them to do so. And good business decisions frequently result in many happy returns. And isn't that what the holidays are all about?
If you disagree with me, I'll see you in court, buddy. If you agree with me, however, I would love to hear from you.