Tuesday, September 21, 2010

The Warehouse drive a hard bargain

I bought some DVDs at The Warehouse at the weekend, and the cashier made me open the cases and check the DVDs for scratches, as she told me they no longer give refunds for them. I thought this was a bit odd, but it got even odder when she gave me the till docket. On it was printed the message that The Warehouse no longer give refunds or exchanges on DVDs/CDs because of the Copyright Act. No mention of exchanges if the disc was faulty.

It seems from the docket that they are trying to opt out of their obligations to consumers under the Consumer Guarantee Act. I asked on Twitter if anyone knew if this was legal, and got several opinions which suggest this approach by The Warehouse is clearly wrong. Lawyer Rick Shera (@lawgeeknz) told me that "Consumer Guarantees Act will override Copyright Act but TW may be responding to licensing terms by Big Music". The folks at Ampilfier sent me this, which "outlines what's not covered by the Consumer Guarantees Act http://tinyurl.com/2fczpvn."

I phoned up The Warehouse to ask them about how this worked, and were they using the Copyright act over the CGA. The person I spoke with directed me to their Returns policy online, which says...

 "Restrictions and exceptions resulting from New Zealand Copyright laws and health and safety issues mean a refund or exchange is only available for the following products if that product is defective:

Music CDs / DVDs / PC Software / Gaming Console Software / Underwear / Earrings

If a product is deemed unsatisfactory, we can offer to exchange it for another one (ie: a different colour or size) or another product for the same value."

Does anyone know exactly HOW NZ copyright laws affect this?

UPDATE 1 (Wednesday 22nd, 10.20am): I emailed The Warehouse last night, asking several questions about the above, after checking the till docket.

I asked...

"1 Why are your staff being instructed to inform customers they will not get a refund, and being made to check the discs? Clearly, if the faulty is on the disc manufacture, that wont be visible til you watch it.

2. What part/s of NZ copyright laws are you referring to in your returns policy and on your till dockets? I see on the back of the docket is a generic message regarding refunds, which alludes to Copyright infringement product as being excluded from refunds. What does this mean?

3. Will you please look at changing your till dockets to read "As a result of copyright laws, product such as CDs, DVD/VCR, gaming software , PC software are NOT refundable or exchangable unless defective?" (last two words added)."

The Warehouse replied to my email at 10am this morning - with a blank email. I'm hoping their next response is more detailed.

UPDATE II (Wednesday 22nd, 9.50 pm):
I got an email back from The Warehouse this afternoon - excerpted below.

They say that "The cashier has asked you to check the disk prior to purchase to make sure you are happy that disk is not damaged/scratched or the incorrect disk and it is not so The Warehouse will not return due to a manufacturing fault on the disks .

"The Warehouse will not refund or replace DVD’s or CD’s IF customers change their minds as this is a breach of the copyright act as customers had in the past, purchased disks, burnt copies and then returned for a refund and due to Copyright laws, we are legally not able to refund or replace disks that are not faulty where a customer has just bought back when the disk is in fact not faulty and any return of DVD’s or Cd’s is at the store managers discretion.

"On the docket, we are not trying to opt out of the Consumers Guarantee act and as stated on the docket :

Restrictions and Exceptions:
Any product covered by warranty
Hygiene product
Copyright infringement product
Unless faulty or defective."

They also pointed to their returns policy on their website, adding that "these products are still guaranteed under the Consumer Guarantees Act."

"The returns policy clearly does state that we will not refund a DVD or a CD UNLESS it is defective or faulty and this is in accordance with the Consumers Guarantee Act.

"Please note that you can contact any of our store managers in regards to a faulty product for a repair (if under warranty) replacement or refund.

"Our team members are not instructed to inform customers will not get a refund if a DVD or CD is defective. This was one team member who obviously communicated to you in a way that was not in accordance to The Warehouse policy on returns and if you care to advise which store you purchased your disks from and the team members name, we can address this with the manager of that store.

"You are not made to check the disks but it is a courtesy we do expect our team members to do in order for the customer to see if there is any damage externally to the disks and to make sure it is the disk the customer is wishing to purchase and the wrong disk is not in the case.

"In regards to the New Zealand Copyright laws, please find attached a copy of the Copyright laws in New Zealand [it was a 5 page introduction to copyright from the Copyright Council of NZ, dated Jan 2009] and as per that introduction to Copyright laws the following is an excerpt from there:-

"Owners of copyright in films, sound recordings, and communication works have the exclusive right to:
• copy their material;
• issue copies to the public for the first time, by sale or otherwise;
• in the case of sound recordings and films, rent copies to the public;
• play or show their material in public; and
• communicate their material to the public.

"This means the owner of the Copyright has exclusive right to copy their material and as such customers who purchase disks with the sole reason to copy that work are in breach of the Copyright laws.

"I have passed on your feedback in regards to the docket wording to the relevant department."


MikeE said...

I used to work in the music bar at the warehouse newmarket, and the returns counter prior to this becoming store policy (haven't worked there for 6 years so it must have been a while since you've either been there, or read the dockets!).

The policy was implimented because of their money back garuntee. I would literally get certain people who lived near the store who would purchase $100 worth of CDs in the morning, go home, rip them, return them and swap for another $100 worth of CDs, go home, rip them, return them, etc and do this multiple times in a day.

Basically their policy is if you change your mind you can't get a refund/swap it which is completely in line with the CGA.

If you break it afterwards, you can't get are refund/swap it which is in line with the CGA. That said, there are issues like DVD/CD rot (I remember when Monsters inc was released and almost EVERY dvd was fucked with DVD rot) where obviously they'd need to replace.

This is pretty much standard practise everywhere now - its the consequence of offering a lax returns policy and people abusing the shit out of it.

lawgeeknz said...

If MikeE is right (and it sounds logical) then it seems to me that the Warehouse is conflating two issues:

1. Returns policy where people change their mind (or have decided to infringe copyright by ripping the music and then returning the CD); VS

2. Defective CD.

So what they are really saying is that if the CD is not defective or otherwise in breach of the Consumer Guarantees Act, they will not take it back because they have had too many instances where people take advantage of lax return policy to rip songs and infringe copyright.

I wonder if RIANZ actually had "discussions" with them to firm up on the returns policy or run the risk of "authorising" copyright infringement?

In any case, whilst the brief check that The Warehouse and other retailers have a customer do is evidence that the CD was not defective or otherwise a breach of the CGA, it is not conclusive (e.g. if the disk wouldn't play because of a DRM incompatability issue then it would obviously still be returnable)

thewalker said...

The Warehouse have been doing this for several years, i would guess roughly since 2002. For a while they would actually stamp each docket to make it clearer.

Whilst it was most likely implemented to counter the type of activity that MikeE describes the concern is that most customers returning product would need to escalate the issue to a manager to get any refund or swap. and how many customers are comfortable doing this?

In most cases you will find that a direct exchange is fine. A bit like trying to return underpants to Farmers.

MikeE said...

@ Lawgeek - the DRM issue was a massive problem when copy controlled CDs first came out when I was there. Especially in newmarket. Turns out they wouldn't play in high end stereos (esp blaupunkt) which was what all the remuera housewifes drove.

Remember many returns of copy controlled CDs at the time (again 6 or so years ago) esp those distributed by Sony.

I probably got at least 50+ CDs returned a day when I was working there, of which maybe 1 was faulty. The rest were because people "changed their mind" .. funny thing was it was the same few people changing their mind every day... if you catch my drift..

Anonymous said...

MikeE seems to be deliberately conflating two different issues. The Warehouse has no obligation to take back any product (not just CDs and DVDs) because the customer changed their mind, under any NZ law. They offer to do so for some products is perfectly fine. They decline to accept for other goods is fine.

However, they have a clear legal obligation under the CGA to remedy defective or misrepresented products. Nothing, absolutely nothing, in Copyright law removes this obligation, and The Warehouse are woefully misleading customers to claim such.

Nothing on a receipt can contract-out of the CGA. But the average punter probably doesn't know this, and is mislead by The Warehouse putting that statement there.

Greg said...

I've been a victim of this stupidity also, being told that they couldn't swap a faulty disk because it was against the Copyright Act.

I can't believe what a legal muddle the Warehouse staff have got themselves into over this - reminds me of the stupidity that happened after the Privacy Act was passed.

It's so easily solved. The Warehouse CAN have a policy that says "We don't swap DVDs or CDs due to our stand on copyright." But they cannot deny consumer rights on faulty products, so should have a proviso on the above "But we will exchange a faulty disk."

After that, it's a staff training issue.