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Microsoft Facing Class-Action Suit Over Xbox Live Points 107

Posted by Soulskill
from the demo-suit-is-free dept.
An anonymous reader tips news that a lawyer in Pennsylvania has filed a class-action lawsuit against Microsoft, alleging that the company's handling of Xbox Live transactions is, in some cases, fraudulent. "Samuel Lassoff, of Horsham, PA, said an invoice he received earlier this month from Microsoft included charges for purchases he couldn't complete due to a balky download system — and he claimed it wasn't an accident. Microsoft 'engaged in a scheme to unjustly enrich itself through their fraudulent handling' of his account, Lassoff charged in papers filed earlier this week in US District Court for Eastern Pennsylvania. ... 'Microsoft breached that contract by collecting revenues for digital goods and services which were not provided,' Lassoff said in his lawsuit."
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Microsoft Facing Class-Action Suit Over Xbox Live Points

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  • How about the so called "enterprise" software you buy for an arm and a leg. When there are serious bugs, can you not also apply the same logic, specifically "collecting revenues for digital goods and services which were not provided" - assuming your expectation was "working" and "secure" software as promised... Mmmm...
    • by chrish (4714)

      Quite often "enterprise" software is bought with a service level agreement and/or support agreement; if there are problems, or it goes down, the company you bought it from is on the hook for fixing it ASAP and sometimes has to pay penalties.

      I'm too lazy to read this guy's claims, but if I spend XBox points on something, I can re-download it later, can't I? It says right on the screen that there are no returns, but I've never had a problem actually getting the download.

      Frankly, I'm more annoyed by MS's refus

  • that which can be adequately explained by stupidity.

    But they still have a duty to correct their mistakes.

    • by delinear (991444) on Wednesday January 27, 2010 @05:27AM (#30914820)

      Except it sounds like this is neither malice, stupidity or a mistake. It's hard to determine what the actual complaint is, but from the Facebook page (I won't dignify it with a link since that's the guy's whole intention, but it's called "Microsoft Point Fraud Class Action Lawsuit"):

      "Defendant Microsoft Corporation received and retained money paid by Plaintiffs in response to incomplete and or partial downloads of digital goods and services and refused refund of same."

      That implies a massive misunderstanding of the system. Points aren't a bank that you can pay into and extract money from at will, they're more like a gift card you can redeem at some future date, and neither does MS make any guarantees about the date of redemption, instead they allow you to re-download your content at any time. That means if your initial download fails to complete, or you can't download because the download system is "balky", you just try again later (and honestly, the only time I've ever had problems with downloads on Live is during dash updates, when it can be a bit flaky for the first few hours as everyone's getting the same download at the same time - more likely if he's having continual problems downloading it's his connection rather than the download system that is "balky"). Either way, once you've spent your points it's up to you to download your content.

      As someone else already said, once MS has your money they have no real interest in not delivering the downloads, all that will do is risk deterring customers from making future purchases (compared to the frankly tiny cost of providing the download). I'm all for giving big companies short shrift when they step out of line, and god knows MS have made some major misteps in the past, but this just looks like a case of a slimy lawyer either trying to hit it big by suing $RANDOM_BIG_TECH_COMPANY, or at the very least trying to get his face and name all over the internet.

      • by lxs (131946)

        Oooh but it is connected... It is all connected in one huge web of conspiracy. Either that or he's off his meds again.

      • When you agree to a purchase both the seller and purchaser have certain legal obligations. In this case, Microsoft, selling the MS points has an obligation to ensure that the system works reasonably well. I've never had problems, however, if MS failed to ensure that their system worked at a minimum standard then they would reasonably be required to refund the real dollars this guy handed over. This is a very simple legal principle and common sense.

        The crux of the case depends on what problems this guy fa

  • by Brianech (791070) on Wednesday January 27, 2010 @05:03AM (#30914718)
    He blames a "balky download system" but when you buy something on xbox live. It doesn't not matter if the download completes. The item is tied to your account when you buy it, and you can download it and redownload it whenever you want. As the article points out this lawyer also seems a little shady (suing a Casino because a drunk attacked him).

    One thing the article did mention that I liked was that MS is considering doing away with points. I know I always have an odd number of points on my account because of so many different denominations of DLC prices. Thats one thing I like about my PS3, it charges my credit card directly OR I can chose to add a certain amount of money to my account. Not trying to incite a flamewar between PS3/360, I have both and love them both for different reasons.
    • by Xest (935314) on Wednesday January 27, 2010 @05:11AM (#30914744)

      I'd actually be quite sad if they did away with the points system. It ensures costings are roughly fair across all regions as it's effectively a global currency, bought for fairly balanced local prices.

      It's much easier for them to set a global price in terms of MS points and sell the points depending on local currency than to constantly try and update the price of every piece of content. You'd end up with a situation like with Steam where people in the UK can be charged as much as 200% of elsewhere. Right now it isn't perfect with MS points, but it is much more fair than most other systems from iTunes to Steam in terms of pricing.

      • I completely agree. It also cuts out those nasty transaction fees, which means in theory more profit can go to the devs, and lower price games are possible.

      • by nutshell42 (557890) on Wednesday January 27, 2010 @06:38AM (#30915096) Journal
        Why should the prices for points use better exchange rates than those for the goods themselves?

        Just checked:

        • Amazon.de, 2100 points for 28EUR means 1.9ct per point.
        • Amazon.com, 1600 points for $19.64, i.e. 1.2ct per point.

        That's steam exchange rates. Also notice how you can't really buy equal amounts of points (at least I didn't see them on the first pages of results) to muddy the waters.

        The fair way to handle the issue would be to set the price for one region then do, let's say weekly, automatic conversions into other currencies (with respective taxes, etc.).

        All we need is some kind of electronic computation machine that can do it for us. Perhaps somebody could hack one together. Imho vacuum tubes look promising.

      • by Rogerborg (306625)

        Right, because calculating a CurrencyValue multiplier for each item rather than just in the Points item is the sort of simple rote mechanical operation that computers totally suck at.

        What's that, you say? It's infinitesimally less work and very slightly more convenient for Microsoft to sell Points? Well, bully for them. That they choose to do so speaks volumes for how they view their customers though. Hint: "Screw you, and your little dog too" about sums it up.

        • by Xest (935314)

          I'm not pretending it wouldn't be easy to do the conversion, what I'm saying is that, for some reason or another, all other digital content stores that use real world currencies end up with much larger pricing disparities than Microsoft have managed to maintain under their points system. Yes it would be nice to have a real currency system, if there was some guarantee I wouldn't get ripped off.

          To illustrate my point, although it fluctuates with the exchange rate, the UK gets charged roughly 111% of what the

      • They have to constantly update costs anyway for price fluctuations and tax changes. Everything they claim would be a hassle is being done. The data just doesn't show on the front-end.

        People do pay more as can be seen here:http://en.wikipedia.org/wiki/Microsoft_Points

        The prices do fluctuate because points in the UK did cost more compared to the US upon my last investigation. So MS probably only changes the price when the pound comes more in line with the dollar but they're happy when exchange rate has
    • by delinear (991444)
      I'll be all for the switch from points to money (for transparency reasons, although I might have a shock when I see what real money I'm spending!) so long as it doesn't continue to store credit card details on the system and instead perhaps allows you to "charge up" an account with money or make one-off transactions without retaining card details. It was a major PITA getting a previous card removed from my system (it wasn't my card, I borrowed it to make a payment for live and they retained the details whic
      • I'm not sure I understand, you want a way to "charge up" your account with money, so you can buy points (and likely not in increments that align with the amount of money you charged the account up with), so that you can buy content (which again, likely doesn't align with the amount of points you're able to buy)?

    • by Anonymous Coward on Wednesday January 27, 2010 @05:48AM (#30914894)

      Personally I don't mind the points system at all, it means I'm able to use prepaid cards instead of handing them my credit card information. Never mind the fact that I don't actually have a credit card (they aren't as common outside of the US).

      Leftover points don't really bother me. Eventually something cool will come along to spend them on. Of course, Microsoft prefers it if you spend your last 100 points on silly picture packs and then buy a completely new set of points when the next Dragon Age expansion comes along, but I'll just leave the 100 points sitting in my account and put them towards the expansion as well.

      As for the original topic, I dislike Microsoft's general business practices as much as the next guy, but they seem pretty okay when it comes to the points thing. A while ago they had an offer where I could buy Braid at a discount, but (presumably due to a bug) I was charged full price. I hadn't actually noticed that I was overcharged though. Still, a few weeks later, I received an email with an apology and the points were refunded, without any action or complaint from my part. I thought that was very decent of them, and honestly I've started buying more arcade games from them since then.

      • by jgtg32a (1173373)

        >they [credit cards] aren't as common outside of the US

        Really? I haven't used cash in years, I've had the same $40 in my wallet for 2 years.

      • by tlhIngan (30335)

        Personally I don't mind the points system at all, it means I'm able to use prepaid cards instead of handing them my credit card information. Never mind the fact that I don't actually have a credit card (they aren't as common outside of the US).

        Leftover points don't really bother me. Eventually something cool will come along to spend them on. Of course, Microsoft prefers it if you spend your last 100 points on silly picture packs and then buy a completely new set of points when the next Dragon Age expansion

    • I know I always have an odd number of points on my account because of so many different denominations of DLC prices.

      Wouldn't you be just as likely to have an even number of points? I suppose you could have started out with an odd number of points, and bought only things costing an even number of points, so that your remaining points were always odd.

    • I think the guy, in my opinion, is an ambulance chaser but I also dislike the points system that both Microsoft and Nintendo employ. I want to just pay the *exact* price for my software.

      By using points, you end up with left over points, millions of people do this and all those pennies add up to free interest money for MS with no benefit to the consumer as the 360 is by far the most expensive system to get full use out of it.

      By using points they can make it appear as if every country pays the same wher
  • by Degro (989442) on Wednesday January 27, 2010 @05:06AM (#30914728)
    Microsoft perpetually holds between $5-10 of my money, and has for a couple years now. Every time I want to purchase some DLC it's pretty much always the case that my current points pool is short of the price by 100-400 points. Of course they don't sell 100 points - you have to buy 500 or 1000 (I forget the exact amounts offered). I'm sure I'm far from the only one in this situation. It's almost like a superman scam. I wonder how much in total of unredeemed cash they sit on each month.
    • by delinear (991444)

      Except where the theory falls down is, once they've got your cash, they don't care if you spend the points or not. It's not like they're providing a physical product and get some kind of real world benefit in holding onto your money while delaying the delivery of that product as long as possible.

      Also, with purchases as low as 80 points, you can, if you really want, redeem all your points down to something paltry like 40 points easily - depending on how much you spent on the original points that's something

    • What's a superman scam? Google isn't helpful.

      • by wjsteele (255130)
        Go see "Office Space."

        Bill
      • by ch0rlt0n (1515291)
        Wow, I think your question's serious, but your .sig suggests it might be sarcasm and I'm a fool for taking it seriously... um. I guess it's a reference to Superman III and Richard Pryor's scheme to skim off the fractions of a penny from everyone's salaries still held in the payroll computer. Either that or Clark Kent has been trying to sell a famous London bridge to an American. He "has a friend" who can arrange transport.
      • by hairyfeet (841228)

        Here you go [wired.com] courtesy of your old pal da feet. Basically from the looks of it it is pulling a Richard Pryor in Superman 3 and skimming a little amount from a whole assload of folks, thus making you rich.

        Problem is we are talking MSFT here, and this kind of scam probably wouldn't pay their bar tab. It also makes no sense as they don't care if you spend the points now, next week, or next year, as the bandwidth they are using to provide you the content isn't squat.

    • I wonder how much you saved in transaction fees by maintaining a credit balance.

      • I wonder how much you saved in transaction fees by maintaining a credit balance.

        With a credit card? Nothing. Microsoft was the one who saved. I'd happily put 50 cent items on my credit card, but the merchants are the ones who pay around 30 cents plus a percentage of the transaction amount just to process the payment.

        And for those who don't pay their balance in full, how much did they lose by paying interest on the amount that Microsoft now gets to make interest on?

        • by mwvdlee (775178)

          With a credit card? Nothing. Microsoft was the one who saved. I'd happily put 50 cent items on my credit card, but the merchants are the ones who pay around 30 cents plus a percentage of the transaction amount just to process the payment.

          You've got some numbers wrong.
          Let me fix it for you:

          With a credit card? Nothing. Microsoft was the one who saved. I'd happily put 80 cent items plus a percentage of the transaction amount just to process the payment on my credit card, but the merchants are the ones who pay around 0 cents.

          • If that's your credit card deal, you're getting royally screwed. As a consumer, when I buy a $5 item on my credit card, I pay $5. The merchant I'm buying from pays a per-transaction fixed fee plus a percentage. The only time I pay more than the price of the item(s) purchased is if I don't pay off the balance.

            • by mwvdlee (775178)

              Again, you go thinking the merchant actually pays for that.
              He'll just take your $5 item, add the per-transaction fee plus percentage to it and YOU'll pay it.
              They don't explicitely inform you of this, but it's all calculated into the price.

              • If you mean that the $5 price already includes the cost of doing business (credit card transaction fees, rent, lighting, heating, etc.) then I agree.

    • This is my biggest problem with XBOX Live and the Wii Store. It should be handled like the PlayStation Store, where everything has an actual value and I am free to pay the exact purchase price (as long as it is above $5).
    • by berwiki (989827)

      I wonder how much in total of unredeemed cash they sit on each month.

      .... while collecting interest on that money.

    • by GTarrant (726871) on Wednesday January 27, 2010 @09:57AM (#30916514)
      I don't mind that they sell points instead of using money directly - in fact, because you can buy "Points Cards" at various brick-and-mortar or online retailers (rather than buying points directly through the Xbox) it isn't that uncommon to see cards carrying $20 worth of points on sale for $15 or less. This couldn't really happen if the system was simply a dollar-for-dollar transaction.

      The thing that bugs me is that most of the content on the Xbox Live Marketplace - at least in the way of games - costs something that is a multiple of $5. A Live Arcade game might be $5 or $10 (which is 400 or 800 points, respectively, unless the points are bought at a discount), while an Xbox or Xbox360 game for download might be 1600 ($20) or more. In essence, 400 points = $5.

      However, when you buy points, you buy them in multiples...of 500. If you only want a single 400-point game, you have to buy 500 points, and have 100 points left over (and 100 points may as well be 0, unless you're buying an item for your avatar, or perhaps some video downloads, or you're gonna buy more points).

      Please, MS, sell the points in multiples of $5. I know that selling them 500 at a time means people have leftovers and that's money in your bank, though, so it's not going to happen.
      • by Hellpop (451893)

        Hot dogs and buns, anyone?

        Seriously, Cable and satellite have you paying a month ahead for service. Cell service doesn't charge you per use anymore, you generally pay for a package for a specified time frame. They all earn interest on your money. Anything that gives you a rebate instead of just lowering the price, they make interest. Hell, employers who give you a raise in June, but you don't get the money until October are doing it too.

        Move along... no conspiracy here, just old, well established business p

        • that its 'old' doesn't make it "well established". it means you are content with being ripped off and being jacked up for them to earn interest. just because they are ripping you off doesn't make it right.

          key difference is that in those scenarios you are billed for the service provided. They don't bill you 1000 extra and say you'll have use the remainder of the funds on us as well. its like a credit card bill but in reverse... imagine that.

    • This is routine practice for many types of services. My VOIP provider only accepts advance payments and it's most popular for mobile phone contracts. It saves transaction costs and makes the system a lot simpler. It isn't any different from stores offering gift vouchers.

  • by initialE (758110) on Wednesday January 27, 2010 @05:25AM (#30914814)

    Seems to be a rare case when someone can't download from Live - Microsoft collects money and provides a premium service with reliable uptime in this case. How on earth did he decide it's Microsoft's fault his internet is shitty?

    • I agree.

      Certainly, when the class action papers come in, I'm spitting on them and sending then to his mother's house.

  • Did this guy even bother writing to MS?

    RTFA's

    Oh, this guy must be a lawyer. Or someone representing himself.

  • by RoFLKOPTr (1294290) on Wednesday January 27, 2010 @05:48AM (#30914892)

    Let's just SUE 'EM!

    The article makes no mention of Mr. Lassoff's experience when he contacted the Xbox Live support line, and I would expect that if it were less than expedient, that would be a major part of this lawsuit. I have a feeling that he didn't contact them at all, and instead is going straight to suing them. Now don't get me wrong... I absolutely despise the points system due to the fact that the point packs are not proportional to item costs, and that IS intentionally misleading... but it is not fraudulent or illegal, and the points system itself is not what the lawsuit is about.

    Quoted FTA:

    As for Lassoff, he's no stranger to suing big tech companies and other organizations. Records show he sued Google in 2006, claiming the search ads he placed fell victim to click fraud. He also sued Bally's Casino in Atlantic City in 2005, claiming he was attacked by a drunken patron while sitting at a poker table.

    Google is known for their strict policies regarding click fraud, and they are very good at detecting it and very good at not charging the victims and not paying the perpetrators when it happens. This man must be afraid of phones or something, because a simple phone call should have resolved that issue as well. And as for the casino incident..... suing the casino because a patron attacked you? Are you fucking kidding me?

    If this class action suit isn't thrown right the fuck out of court, what little hope I have left for our nation's judicial system will be lost.

    • not a patron, a drunken patron. i dont know, but i would hope that is the only reason he is able to sue them (along with and in addition to the drunken patron himself).

      not that strange. if you leave a bar and drive home drunk and hit someone the bar is usually sued..

      let the case speak for itself, whether its actually valid or not i dont know, and I'd agree with you if he didn't contact support, but if he did I have no sympathy for them. Companies seem to love to not resolve problems these days. Took me

      • and I'd agree with you if he didn't contact support, but if he did I have no sympathy for them.

        Your credit card issuer has this little thing called a "Claims Department." This department researches cases of "fraud" and when they determine that there was a fraudulent charge to your card, they can file what is called a "chargeback." These chargebacks will refund you the full amount that you were fraudulently charged in addition to any interest accrued on the purchase, and also charge the merchant a fee of usually $35. So if Mr. Lassoff did contact Microsoft, and they weren't willing to refund him witho

  • But this is a tempest in a teapot. Broken downloads mean nothing.
  • Hotdogs come in packs of 8 and Hotdog Bun come in pack of 6, its a scam.

    • by mjwx (966435)

      Hotdogs come in packs of 8 and Hotdog Bun come in pack of 6, its a scam.

      Only if you're stupid enough to fall for it, smart people just buy a loaf of multi-use bread and have done with.

  • ...but are they illegal? No. You are purchasing a digital form of currency--it's like an exchange rate that remains static despite economic flux.

    Get over it.

    • They aren't illegal but it's a dodgy business practice with zero benefit to the consumer but loads of benefits for the business.
  • If this goes to trial and I were a lawyer for Microsoft, I would just produce a list of the number of users who were able to successfully download the product in question within a 48 hour window. There is a really good chance that number is >1. If what the article says is true and the plaintiff is whining about the entire download system as a whole, I'd just produce a list of the number of successful downloads in that same 48 hour period that frames the time the plaintiff is charging he had a problem i

    • If this goes to trial and I were a lawyer for Microsoft, I would just produce a list of the number of users who were able to successfully download the product in question within a 48 hour window. There is a really good chance that number is >1. If what the article says is true and the plaintiff is whining about the entire download system as a whole, I'd just produce a list of the number of successful downloads in that same 48 hour period that frames the time the plaintiff is charging he had a problem in.

      While i don't think the first paragraph point you talk about is that part being contested there is a MAJOR problem with your logic. You are generating a list in the wrong direction. Whether it works for 1 person or 1 million people is irrelevant in the validity of his claim. If it's not working with any consistency for anyone there is a problem. All that list does is exclude people from the class.

      If I were his lawyer (and also was contesting that issue (which I'm not on both counts) ) I'd draw up a list

  • I think it's utterly attrocious that they get to make a fake currency, force people to buy it in absurd bundled quantities basically force you to waste money. The only legal tender in this country is USD last time I checked. Forcing me to buy your funny money seems pretty much by definition an anticompetitive and fraudulent practice done solely on the premise of making a profit on unused points and forcing us to buy something we wouldn't with our "leftover" otherwise unusable cash, or to give them a few m

    • by kramerd (1227006)

      What the hell are you talking about? First of all, all currency is fake. Microsoft has never forced you to buy anything. If you don't want to waste money, don't buy DLC (or in most cases, games). Legal tender is the clause that makes says that any viable currency be accepted in payment of debt. In other words, if Microsoft deals in microsoft points, they cannot say that you can no longer use points so long as you have them already; ie, if Microsoft wanted to close down microsoft points, they would have to

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