Saturday, March 5, 2011

Online textbook seller may be liable under Michigan law for falsely promising students they'll save money

From the BNA Electronic Commerce & Law Newsletter (subscription required):

An online textbooks retailer who allegedly charged customers inflated prices while telling them they would “save money,” and who did not disclose that referring schools received a commission, could be liable for deceptive trade practices in Michigan, the U.S. District Court for the Eastern District of Michigan ruled March 1 (Stalker v. MBS Direct LLC, E.D. Mich., No. 10-11355, 3/01/11).

The plaintiff stated a plausible claim that the company's partial disclosures about its sales practices convinced customers to purchase its products rather than shop at its lower-priced affiliate website or other lower-priced competitors.
. . . .
Michigan's Consumer Protection Act prohibits “unfair, unconscionable, or deceptive methods, acts, or practices in the conduct of trade or commerce,” Mich. Comp. Laws §445.903(1).
According to the plaintiff, the retailer's website violated that law in at least five ways. The retailer—an online service that sells new and used textbooks—has exclusive contracts with over 600 schools through which it sells textbooks to students. Generally, the school provides a link to the defendant's website through its own website, and students are sold books for the class schedules they provide.
Although the website, in its frequently asked questions and other pages, stated that it helped students save money, its products actually cost more than other outlets, the plaintiff alleged. In addition, the site paid schools a commission on sales, and could have charged lower prices without that commission, according to the lawsuit.
With respect to this aspect of the plaintiffs' claim, the defendant's motion to dismiss was denied.  Here's a link to the complaint filed last April. At present the court's opinion doesn't seem to be available on a non-subscription website.

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