Guy Buys $3 Billion CD-ROM

from the economy-must-be-looking-up dept

Tue, Jan 5th 2010 8:43pm — Mike Masnick

There have been plenty of stories over the years of mispriced goods being found on various e-commerce sites. In the past, I recall stories about airline flights for $10 or computer monitors for $1. All of them were typos, and often the company behind them would deny the sales even as thousands rushed to buy. I never had a problem with companies denying such sales, but many insist that they should be enforced at the stated price. Last year, Taiwanese regulators forced Dell to live up the $15 price it accidentally posted on monitors to the 140,000 people who bought them. Whenever we write about these things people insist that, like in Taiwan, companies should be forced to honor the price.

So I'm curious what people think when the situation is reversed. In an extreme example, a guy bought an obviously mispriced $3 billion CD-ROM on Amazon. Well, the full price was actually $2,875,934,133.57, but amazingly, it did not include shipping (and handling) which added an additional $3.99 to the bill. Of course, it didn't take long for Amazon to alert him that it was unable to complete his order and that he was not charged for it. But do the people who support forcing the retailer to honor the deal in the first case support it in stories like this as well?

Thank you for reading this Techdirt post. With so many things competing for everyone’s attention these days, we really appreciate you giving us your time. We work hard every day to put quality content out there for our community.

Techdirt is one of the few remaining truly independent media outlets. We do not have a giant corporation behind us, and we rely heavily on our community to support us, in an age when advertisers are increasingly uninterested in sponsoring small, independent sites — especially a site like ours that is unwilling to pull punches in its reporting and analysis.

While other websites have resorted to paywalls, registration requirements, and increasingly annoying/intrusive advertising, we have always kept Techdirt open and available to anyone. But in order to continue doing so, we need your support. We offer a variety of ways for our readers to support us, from direct donations to special subscriptions and cool merchandise — and every little bit helps. Thank you.

–The Techdirt Team

Filed Under: pricing, pricing mistakes
Companies: amazon

49 Comments

If you liked this post, you may also be interested in...

Reader Comments

Subscribe: RSS

View by: Time | Thread

Nate (profile), 5 Jan 2010 @ 8:12pm

What comes to mind for me: "The customer is always right."
[ link to this | view in thread ]
Brendan (profile), 5 Jan 2010 @ 8:48pm

No, because it should be skewed in favour of the consumer
The companies have the aggregate power to screw us, whether intentional or not.

The balance of power needs to be shifted back to the consumers through biased protection.
[ link to this | view in thread ]
thublihnk (profile), 5 Jan 2010 @ 9:04pm

Well, unless he's using a card with a credit limit of +3Mil, no, the transaction would not be able to be completed, the purchase wouldn't be finished and the sale wouldn't happen.

So that line of logic doesn't work.
[ link to this | view in thread ]
Bradley Robb, 5 Jan 2010 @ 9:28pm

Re:
That's the first thing I thought, how the hell did his bank clear the initial transaction request?
[ link to this | view in thread ]
Brian (profile), 5 Jan 2010 @ 10:06pm

The first thing that I thought of was how the hell do you screw up THAT MUCH at typing in the price? I mean putting a price of $15 instead of $150 is just easily missing a zero. But this looks like someone had a massive seizure while typing and then hit submit and never thought to fix it.
[ link to this | view in thread ]
sehlat (profile), 5 Jan 2010 @ 10:07pm

Yes, the buyer should be forced to pay up.
At least, that's what the banks said when they bought "the debt slave act of 2005" aka "bankruptcy reform" from Congress.
cf. Bankruptcy Filings - As Ye Sow So Shall Ye Reap
[ link to this | view in thread ]
Davis Freeberg, 5 Jan 2010 @ 10:10pm

What comes to mind to me is now Amazon beat their 4th quarter numbers.
[ link to this | view in thread ]
Brad Hubbard (profile), 5 Jan 2010 @ 10:24pm

Re: No, because it should be skewed in favour of the consumer
That's...helpful?
[ link to this | view in thread ]
Brad Hubbard (profile), 5 Jan 2010 @ 10:25pm

Re: Re:
I bet they just wanted to charge the $35 overdraft fee.
[ link to this | view in thread ]
Anonymous Coward, 5 Jan 2010 @ 10:44pm

Re:
No, it's something to do with how floating point math works on a computer, but I can't for the life of me remember what...

basically it's a bug in some software, no human error (or well it's programmer error not a typo)
[ link to this | view in thread ]
Anonymous Coward, 5 Jan 2010 @ 10:46pm

Re: Re:
I know because I've seen the number before, reading about someone debugging something or other... or something like that... but I can't remember where and googling the number itself is a googlewhack releated to this misprice.
[ link to this | view in thread ]
Chadwick, 5 Jan 2010 @ 10:53pm

No, companies should not be forced to honor outlandish prices.
It is ridiculous how selfish our society is becoming. Too many people see mistakes made by retailers as something they can exploit in order to get what they want or need.

Its even more ridiculous when you're talking about a purchase made online where you don't spend any personal resources, and not even that much of your time. Even if you buy from a brick and mortar you might drive 10-50 miles and you're only out the gas. And in that case most of the retailers I deal with would compensate you in some way, like 10-15% off. On the same note, I have never ran into a situation where a reasonable mistake, like an item being priced with an old sale price, doesn't just get honored anyway.

And companies don't eat large losses like that, they just pass the cost on to the consumer. Bet those monitors got a little more expensive after that debacle.
[ link to this | view in thread ]
Anonymous Coward, 5 Jan 2010 @ 10:54pm

@Nate

"What comes to mind for me: "The customer is always right.""

This to me is what is wrong with America. The customer is NOT always right. In fact, sometimes they are flat out wrong and dumb. This mentality is the underlying sense of entitlement that is destroying a once great nation.
[ link to this | view in thread ]
Steven (profile), 5 Jan 2010 @ 10:57pm

Re: Re: Re:
Sorry guys. That number is not at the limits of either long or int values, nor is this an issue of floating point math. floating point issues can only move a number a very small amount, and any programmer worth his pay wouldn't use floating point values for money.
[ link to this | view in thread ]
Steven (profile), 5 Jan 2010 @ 10:59pm

Re:
http://notalwaysright.com/
[ link to this | view in thread ]
harbingerofdoom (profile), 5 Jan 2010 @ 11:19pm

Re:
no, the customer is not always right. in fact, in some industries the customer is hardly ever right.

but they are always the customer and you better recognize that little fact if you would like to keep them as a customer.
[ link to this | view in thread ]
Frank, 5 Jan 2010 @ 11:34pm

It wasn't me
By not being able to be honest and say oops made a mistake or I did that by accident, too many people try to pass the blame onto someone else. It was an error it happens. No he shouldn't be forced to pay nor should dell have to, unless they purposely misled people. Would someone at Dell not have noticed about 140000 monitor orders and how quick they were racking up?
[ link to this | view in thread ]
Jake, 5 Jan 2010 @ 11:57pm

This is a rather extreme example, but I would have had limited sympathy for the guy if he'd pleaded poverty had Amazon held him to the higher price in a less clear-cut case. It's the retailer's responsibility to ensure that their pricing information is accurate, but it's the customer's responsibility to make sure they can afford what they're trying to buy.
[ link to this | view in thread ]
Ima Fish (profile), 6 Jan 2010 @ 12:24am

There's this area of the law called contract law. In these mistaken price situations, the seller makes an offer, the buyer accepts the offer and makes a purchase, and then in some situations the seller validates the acceptance by charging the buyer's credit card and sending out a confirmation through an email.

That's a contract. And it pisses people off when after the acceptance has been accepted... and after the buyer has been charged.... suddenly the seller backs out.

"But do the people who support forcing the retailer to honor the deal in the first case support it in stories like this as well?"

Mike, when making an analogy, you should at least attempt to be analogous. Was it possible for Dell to honor those mispriced items? Sure. Was it at all possible for the buyer of the CD to honor his purchase? Nope.

And this guy did not make a mistake to the seller's detriment. The seller did not rely on its own mistaken price in the same way that the buyers of the monitors relied on the low prices. The guy attempted to make the purchase solely to inform the seller of his or her mistake.

The more analogous example would be the seller mistakenly giving too much, i.e., raising the original offer with a higher counter offer. But that's not what happened here.
[ link to this | view in thread ]
Luci, 6 Jan 2010 @ 12:26am

Re: Re:
Saved me the linking. Thanks. :D
[ link to this | view in thread ]
:), 6 Jan 2010 @ 1:02am

He should not be liable.
Nor should Dell.

But I can see people abusing that situation on both ends(consumer and sellers).

I just don't think it is a big issue right now the abuse part from both parties.
[ link to this | view in thread ]
jeremy (profile), 6 Jan 2010 @ 1:25am

In UK Dell wouldn't be liable
In the UK I believe the Dell situation would have been different. An advert or a price tag on goods in a shop is not an offer in contract terms it’s an ‘invitation to treat’ which is, essentially, an invitation to a potential customer to make an offer. The customer then makes an offer for the goods (generally at the price advertised in the invitation to treat) which the retailer is at liberty to accept (in contractual terms) or to refuse. The retailer is under no obligation to accept the offer even if it's at the advertised price.

There’s a bunch of consumer protection law to stop misleading advertising but in the case of a pretty obvious mistake the retailer isn’t obliged to accept the offer or complete the transaction.
[ link to this | view in thread ]
JackSombra (profile), 6 Jan 2010 @ 2:25am

Dell case, they actually took the money and then attempted to back out

This case, transaction (funds transfer) never took place

Thus two senarios are not compareble

If Amazon had actually managed to get hold of the money would say the CD would have actually arrived
[ link to this | view in thread ]
Lachlan Hunt (profile), 6 Jan 2010 @ 2:55am

There should be some fair rules appied, like there are in Australian retail for mis-labelled prices. There are rules for when the labelled price is higher or lower than the scanned price that specify which price you pay, and how many items you're entitled to at the discounted rate, etc.

Something like, If a price is mistakenly listed lower what it should cost and the customer orders it beliving that's what they'll be charged, but the store charges and ships the item a higher price, then the customer should be entitled to a refund of the difference.

If the store notices the price discrepency before the customer is charged and item shipped, then the store should be able to contact the customer and offer to either cancel the order without penalty or get the customer to agree to the higher price.

In this case, the customer's card transaction would have, at the very least, ended up being declined due to insufficient funds. If you try to purchase any item, even one at a more reasonable price, and your transaction is declined, then the sale just ends up being declined. You usually don't ultimately end up being chased for the money anyway.

I don't have an opinion on cases where the listed price is excessive, but still within the customer's limits, and the customer stupidly agrees to pay that much. This would be like the case of the $999 iPhone app, where I read at least one customer stupidly bought it thinking it was just a joke.
[ link to this | view in thread ]
Aaron deOliveira (profile), 6 Jan 2010 @ 3:15am

pricing mistakes
extreme pricing mistakes like this usually happen when they put information in the wrong field. 287593413357 is probably a serial number of a sku number for them. something that has significance somewhere. when they put it in the price field, the program just said "okay" and charged 2.8 billion.
[ link to this | view in thread ]
cc, 6 Jan 2010 @ 3:57am

The reply from Amazon looks automated: they did try to get the money from his account, but it just wasn't there. No different from trying to get £50 out of an account with £25 in it.
[ link to this | view in thread ]
Naval Patel (profile), 6 Jan 2010 @ 4:00am

One of these is not like the other...
Computer monitor: $200. Computer monitor after a pricing error: $1.

Flight to Europe: $1500. Flight to Europe after a pricing error: $10. [location randomly chosen]

Cost of a CD after pricing error: $3 BILLION. Cost of a CD:
[ link to this | view in thread ]
Michael, 6 Jan 2010 @ 4:00am

Re:
How can you be sure the guy cannot honor the price?
[ link to this | view in thread ]
Michael, 6 Jan 2010 @ 4:05am

What happens next?
So if this guy ends up not buying the CD and instead downloads the mp3's illegally, is it a $3 billion loss to the recording industry?

The real question here is how did this guy not notice the price? I use one-click on Amazon, but I tend to notice the prices before I click the buy button. I would think a price that high would stand out just a bit.

I also wonder who downstream in the purchase process noticed this and did something about it. I would hope paypal or his credit card company would notice a charge that high and give the guy a call. I'm going to call my bank and ask them to put a hold on all charges over $10 million - just in case.
[ link to this | view in thread ]
DS, 6 Jan 2010 @ 4:05am

Re:
The customer is generally never right.
[ link to this | view in thread ]
Griff (profile), 6 Jan 2010 @ 4:17am

Why shouldn't Dell honour the price ??
For one thing, if they claim so many people bought at $15 because of the mistake, then word had got around and they (Dell)should have figured it out too. If they want the advantages that come with highly automated selling, they have to take some downsides.

Secondly, $15 is not unheard of for a special offer. In the UK we have seen special offers of £10 transatlantic flights (offered by a vacuum cleaner company, it all went rather badly actually).
So do you claim that everyone was supposed to know this was a mistake ?

Thirdly, if you claim Dell should have not had to honour it, where do you draw the line. Suppose the correct price was $500 and they accidentally advertised $495 ? Do they get to claw back $5 from everyone ?
What constitutes an accident ? Being able to find a scapegoat employee to parade in front of the press and claim it was mistake ?

I think the only argument for the Dell defence is the suggestion that everyone who bought KNEW it was a mistake. But I've seen Amazon claiming 93% discounts on some items in recent weeks. (I suspect they were inflating original alleged prices). Am I supposed to not buy because it might be a mistake ? What constitutes an obvious mistake ?
[ link to this | view in thread ]
John Doe, 6 Jan 2010 @ 4:34am

Re: No, because it should be skewed in favour of the consumer
That is where you are wrong. The consumers have all the power if they would just use it. Look at what happened to Circuit City.
[ link to this | view in thread ]
John Doe, 6 Jan 2010 @ 4:38am

Not the first time Amazon has screwed up
Not long ago, they have a $12 million flat panel TV. I tried to put a bunch into my cart to see if they had a limit somewhere but there were only 4 in stock. I checked back a couple weeks later and they were still miss-priced.

Seems like an easy query run every day could catch this sort of thing. Just do a search for all items over a certain, reasonable limit and see if those items really should list for that much. It would be a little harder to catch under priced items though.

I for one don't think retailers should be held to the price as the consumers know it is a typo and try to take advantage. If you get the deal, good for you, but if you don't you shouldn't cry about it.
[ link to this | view in thread ]
Comboman, 6 Jan 2010 @ 5:21am

options
Retailers should have the option to either complete the sale at the mistaken price or cancel the sale. They should NOT have the option to force the sale at a price the customer did not agree to.
[ link to this | view in thread ]
ComputerAddict (profile), 6 Jan 2010 @ 5:32am

Re:
This is what I thought, and Why it makes it different than the DELL deals.

Since with the Dell deals the customer was charged, the transaction was complete.

Imagine if you bought something at Best buy that costs $100 you bring it to the register and it rang up for $10, the worker didn't day anything and let you pay it. You grab your property and the manager tries to stop you at the door and asks for $90 bucks. Its your property as soon as you pay for it. you have the right to say screw you and walk out. Its their mistake for completing the transaction.

In the case of the CD drive its like grabbing something that was misshelved or mis-tagged, bringing it to the register and it ringing up as $3 mil more than you expected. You wouldn't buy it and you wouldn't be forced to..
[ link to this | view in thread ]
Jimr (profile), 6 Jan 2010 @ 6:25am

It has been a while since my contract law class...

The listed price is what the retailer is willing to entertain as fair offer for the item.
You, the buyer, then offer to buy the item at recommended price.
The seller then can accept or reject your offer (refuse to sell to you). The seller could counter offer and the buyer could counter offer again... etc etc.

It is you, the buyer, that is initiating to contract to purchase. It is up to the seller to accept or reject your offer. The price tag is just something the seller does to help the buyer start of the negotiations with what the sell is typically willing to accept.

In this case the guy offered $3 billion for the CD-ROM. Amazon, as the seller, has the right to reject his offer. If the CD-ROM was listed as 0.01 cents by mistake then Amazon also has the right to reject the offered price from the seller.

This should tell you that anything and everything for sale is up for negotiations. The printed price on an item is the minimum offer the sales clerk will accept. Take to a manager or higher and they maybe authorized to accept a lower offer to purchase.
[ link to this | view in thread ]
Peter M., 6 Jan 2010 @ 6:28am

Amazon affiliate
Damn!
I sell Amazon affiliate items from my web store- imagine if he bought this after clicking through on my site and I checked my daily sales report..... break out the smelling salts!
[ link to this | view in thread ]
Anonymous Coward, 6 Jan 2010 @ 6:34am

Re: Re: Re: Re:
... the web app showing the price very likely did (weather or not floating point is used for calculating the final charge)
[ link to this | view in thread ]
MCR, 6 Jan 2010 @ 6:43am

Re:
What if it had been $3,000 instead of $3B? He apparently agreed to the price (albeit in error), and all the little stages of the transaction you described were completed.

Amazon would obviously refund the difference because they'd realize it was an error, but should they have to (as Dell was forced to honor the monitor price)?
[ link to this | view in thread ]
Chuck Norris' Enemy (deceased) (profile), 6 Jan 2010 @ 7:02am

Re:
The customer is always right is only true if you want them to continue to be your customer. If you don't want them to return (which I am sure there are plenty) then declare them wrong. Of course, you might end up getting sued thanks to our litigious society.
[ link to this | view in thread ]
mike allen (profile), 6 Jan 2010 @ 7:09am

if the guy
if he is stupid eough to pay that and has the funds to do so sure they should honour the order.
same as the other way around. which in the UK is ilegal for a store to say that the price is wrong we want more money.
not sure in this case though as to legality.
[ link to this | view in thread ]
Yakko Warner, 6 Jan 2010 @ 7:31am

Re:
NotAlwaysRight.com

Happy reading!
[ link to this | view in thread ]
nraddin, 6 Jan 2010 @ 8:16am

they should have to give it up
Dell should have to sell the monitors at the price they listed, and this guy should have to pay. It's a contract, once I agree to pay and you agree to sell you shouldn't be allowed to say later that you have changed your mind. We agreed to a price, if your price was a mistake you should have said something on or before the time of sale.
[ link to this | view in thread ]
RD, 6 Jan 2010 @ 8:49am

umm....WTF???
"once I agree to pay and you agree to sell you shouldn't be allowed to say later that you have changed your mind."

What???!??! Since when?? Since when can a buyer NOT change his mind on a retail purchase and as for a refund? SINCE WHEN??

Think before you post.
[ link to this | view in thread ]
Darren Kopp, 6 Jan 2010 @ 9:33am

it was for the rewards
he also bought with his visa, so he'd be entitled to about 87 million in rewards, had it actually gone through.
[ link to this | view in thread ]
TechDan (profile), 6 Jan 2010 @ 9:55am

Hmm...
Didn't the Dell thing happen through an automatic system? Why should Dell be held to the typo price? It would be impractical for Dell to have a human check every single transaction that occurs, and the system itself is not flawed. This man would almost certainly have been charged for the purchase if it had been a more reasonable typo, and I'm sure Amazon would have refunded the excess and not held him responsible, just as Dell should not have been held to their typo. There's protecting the consumer, and then there's shafting the business. Protecting the consumer is fine, but Dell got fucked.
[ link to this | view in thread ]
Matt (profile), 6 Jan 2010 @ 2:02pm

Re:
Wait... no, that is not how sales contract formation works. Courts have universally held that the seller's advertisement is _not_ an offer - that's why Dell didn't have to honor the price in commonwealth countries. It is merely a solicitation, or an indication of availability.

The _buyer_ makes the offer to buy, by plunking down money. The seller accepts or not. Here, the seller wisely declined the impossible offer, which was obviously premised on a mistake about the price. The mistake was probably mutual, meaning there was never an agreement on price. AT common law, this would mean that there was no contract at all (here, common law would not apply). If it were unilateral - only the buyer was wrong - the contract could be reformed to correct the mistake.

Incidentally, this sale was probably governed by the UCC. Had Amazon gone forward with the transaction without agreement on price, the contract would have been enforced at a "reasonable" price, which may have been deemed to be the price of the same product FOB the buyer's town. In other words, Amazon may have had to eat shipping.

As to whether seller's should be held to low advertised prices... the standard should be (and is) that seller's are required to make truthful claims in their advertising, and are required to exercise reasonable care and diligence in finding facts and declaring them. They ought not make deliberate mistatements, particularly for the purpose of attracting sales that they otherwise would have lost to a competitor. Holding seller's to stupid low prices solves the wrong problem by paying the wrong people the wrong amount. Buyers are hardly ever harmed by a typo, but competitors can be eviscerated by it. They are the ones to be made whole, not consumers.
[ link to this | view in thread ]
His Dirt Baggiy, 6 Jan 2010 @ 3:58pm

Slave labour
The buyer should be forced into Hard labour for life for failing to meet his obligations, however he could plead to the Obamha administration to fork out a meassley $3 billion like small change it is.....

PAY man Pay up and stop be a coward!
[ link to this | view in thread ]
Carrie, 9 Nov 2010 @ 6:20pm

Others may not be so lucky
The CD buyer was very lucky that Amazon was ethical enough to correct the consumer's blatant mistakes. Many online businesses, however, are not that kind, often force consumers into the red because of careless errors. In unfortunate situations like this, companies like DebtGuru are there to help. By working with individuals and companies reduce or eliminate accrued debts, they have already allowed many people to get back on their feet. Their credit counselors are very helpful.
[ link to this | view in thread ]