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6pm.com's 1.6 million dollar pricing mistake (zappos.com)
138 points by failquicker 2432 days ago | hide | past | web | 80 comments | favorite

Iirc there is not necessairily a legal requirement to honour those orders. So kudos to them for choosing to do so!

It falls under contract law, and yes they're required to honour those orders as it fulfils all the requirements of a contract. A mistake is no defence in civil proceedings for contract violation. Once you've 'purchased' an item, regardless of whether the money has been deducted from your credit card yet (Amazon charges on dispatch, but has to honour the price made at the point-of-sale) or not, you've both agreed to a contract to exchange a product for currency. A company not delivering a product is just like a customer not paying, only it's much easier to file a lawsuit against a company than an individual.

Considering they could have had to pay $1.6m + class action legal fees means they saved a lot of money by simply taking the loss.

Pretty sure this is not true at all. If they take your money and do nothing, that's a problem. If they take your money, say "oh fuck, we don't have that item at that price anymore", and give you your money back, everything is fine. If they never take your money (as they don't charge you until they actually ship the order), then they have even less obligation.

What they probably can't do is ship you your stuff for $50, find the mistake a month later, and then silently charge your credit card the $500 difference. And they probably can't ask you to send the stuff back.

After money has changed hands, here in Ontario at least, it is a violation of the consumer Protection Act to withhold the goods and renegotiate the price and a company is legally liable up to $250,000 for each infraction in punitive damages.

If they take your money and don't have the item, they have to refund you or provide a like product at the same or discounted price, cannot be more than 10% more than the listed price or it violates another subsection of the law for price estimates. Or they're back into the above and $250,000 in punitive damages.

If they don't take your money, they're open for a suit for advertising the product and not providing it at the listed price. At this point it is merely on the judges discretion, and doesn't fall under the CPA. However, considering every product was capped at $50 and no one noticed, they would really be up shit creek without a paddle. It's a gross mistake and they made no attempt to reconcile the error (you know by shutting down the site) until 6am because they made no effort to check their pricing accuracy.

Like I said, they'd be open to a $1.6m lawsuit + the cost of legal fees and considering they obviously made no effort to check their prices, I don't see how they would have a defence. This isn't one little item that slipped through the net, it's the whole fucking store including the vinyl floor tiles!

There's no guarantee they would have to pay, it would be entirely up to a judge, but considering they obviously have no practices or policies in place to ensure these things are caught means they'd have no defence in court saying 'it was a mistake' because it wasn't, it was a complete lack of a price accuracy policy.

Are you a Canadian lawyer? The alleged laws you describe are quite far from the practice in other common law countries, but are quite similar to the misconceptions non-lawyers have about the law in most other common law countries, so I'm skeptical.

It's a gross mistake and they made no attempt to reconcile the error (you know by shutting down the site) until 6am

Did you read the article? They shut down the site when they saw the problem, which occurred between midnight and 6am, a popular time for sleeping.

Futureshop has repeatedly refused to uphold mis-priced items in Ontario.

>After money has changed hands, here in Ontario at least, it is a violation of the consumer Protection Act to withhold the goods and renegotiate the price and a company is legally liable up to $250,000 for each infraction in punitive damages.

You're absolutely wrong.

There is a strong protection here in Ontario against liability for technical errors, and it has come into effect multiple times (always with entitled people thinking they won the lottery writing angry letters to the editor decrying their grievous injury). So long as they reverse any charges, neither party is out anything and no one has any entitlement to the result of a mistake.

Just an FYI, here is the relevant terms and conditions:


In the event a product is listed at an incorrect price or with incorrect information due to typographical error or error in pricing or product information received from our suppliers, we shall have the right to refuse or cancel any orders placed for product listed at the incorrect price. We shall have the right to refuse or cancel any such orders whether or not the order has been confirmed and your credit card charged. If your credit card has already been charged for the purchase and your order is canceled, we shall immediately issue a credit to your credit card account in the amount of the charge."


If you are going to talk like a lawyer you should act like a lawyer and read the fine print.

Terms and conditions aren't legally binding, perhaps you should read the law.

Terms and conditions are very much legally binding in the case we are discussing (online sales) - you are explicitly offered them as the contractual terms of sale.

What T&C can't do is rescind the basic consumer rights offered under law

electromagnetic contends that the "basic consumer rights offered under law" include the obligation for the seller to have an infinite number of any item in stock and ready to ship at whatever price the website happens to say, even if it's an obvious mistake.

Well I've just been skimming the books on my law shelf (Google was completely unhelpful) and they seem to back up what we've been saying so far; there is no provision under current consumer law to force the retailer into honouring it (actually there is sort of one but it's wording basically says "unless the retailer says otherwise..." etc.)

IANAL so that's just how I read it.

This depends on the country.

If I remember my law class in the UK, there is no legal reason to ship the goods in this situation. The price online is only one that is offered. The buyer giving money to the retailer is considered an acceptance of the offer, but the contract is not binding unless the retailer then displays that they still wish to go ahead with the transaction on those terms. My lecturer always referred to it as the courts wanting to see "a meeting of minds."

This leaves online retailers (and brick and mortar that sticker an item wrong) the time to change anything before the item is placed in the buyer's hands, and the court will look particularly down on a transaction where the buyer could not have reasonably expected the transaction to be valid (like buying a TV for 1 GBP).

My understanding was that much of contract law in the US was based on UK law, but I am by no means a lawyer in either jurisdiction :)

In Poland price online is not even an offer.

It's request for offers of purchase from customers. When buyer puts item in the online basket and fills in his details he is making an offer to the seller that he wants to purchase the goods at the given price. If the seller sends the buyer confirmation email stating that he actually wants to deliver the good (automatic notifications about registering buyers offer do not count) then the contract with all the following obligations is formed.

I last had this discussion sometime last year when Argos did much the same mistake here in the UK - but cancelled the orders. At the time a contract lawyer weighed in and explained there were various caveats and so forth that allowed them to do this.

(certainly prior to taking the money then they are able to simply cancel the order at any time. After that I suppose it depends on the country/contract law involved)

I know here in Ontario, they can cancel but they are legally open for violating the consumer protection act for misleading practices and a mistake is no protection in court.

An agreement between stores, and I believe one Amazon.ca upholds, is that they offer you the product at the original price with a $10 discount/credit (if it costs more than $10 - free if it costs less than $10). However, this is just a practice to placate the consumer as on gross mispricings like a $1000 TV for $5 people know they're taking advantage and will either be happy to take the $10 off, or will cancel the agreement thus removing all legal liability on the company. However, if the $5 had entered the till and a manager came running out trying to stop you leave with the TV, well you just got a $5 TV and if they stop you, they get up to a $250,000 fine and you get yourself a TV. Quite ironically though, if you notify the cashier of the mispricing, most store policies will give you the item for free regardless of price! So the people walking away with the $10 credit are really losing much more than if they had honestly notified a manager.

One of the caveats is that the agreement is generally to sell X number of products at $Y price, and if they don't have the quantity of products to supply the amount of orders they can actually cancel the orders and later reoffer them at a corrected price, which is probably what Argos got away with.

Are Zappos based in Ontario (I wasn't sure if that is why you mentioned there in particular?).

Ultimately it will depend on where the company is based; but for the most part mispriced items are usually explicitly accounted for in the Terms and Conditions of sale you agree to (I know that was part of what Argos used over here).

I seem to recall there was a legal argument over it.. because in the real world if a shop advertises a $10 for $1 there is no legal requirement (at least not here) for them to sell it at that price - if they notice. If they accept your offer to buy at the lower price then there is nothing they can do.

The argument was that digital sales worked in a different way (and that manually approving each sale like in a shop was infeasible) so I am pretty sure a lot of work went into making sure the law applied to when the item was shipped. I noticed Amazon still don't take money till they ship the item; so it could be this was never actually resolved.

(by the way I can't find any references to the laws you mention - got any links?)

Are Zappos based in Ontario

No. They are based near Las Vegas.

If what you have said is true then the opposite action must also be true. (example based on my understanding of the sale of goods act).

You walk into a store and walk up to the till and ask to buy something, then at that moment the person behind the till tells you the price is wrong and it's actually 3 times that. Buy saying you wanted to buy it you are then contractually obliged under consumer law to then pay for the goods.

Doesn't sound right now does it.

Argos didn't get away with anything, they are no requirement under the sale of goods act to honor the price and can cancel the order (effectively they are refusing your business which is how it actually works but is obviously not worded as such for politeness) if they choose to.

Silver lining.

Until today I had not ever heard about 6pm.com.

Due solely to their mistake, this post, and their honor, I'll be sure and check them out for future purchases.

I was thinking the same thing. And I even spent that last 10 minutes perusing their site. I don't know if this publicity was worth 1.6 million in the long run, but I believe it will bring in more sales than if it had not occurred. I am even tempted to pass this site along to my wife (the big shopper in our household).

God those are ugly.

Agreed. But my girlfriend just gave me a 10 minute lecture on "How You Have No Taste" :) so what do we know.

"taste" goes in circles anyway. You're just ahead of the curve to such a degree, you appear to be behind it.

Maybe you've lapped Good Taste, and are catching up to it again.

Somehow I don't think XKCD t-shirts will ever come [back] into fashion :)

This implies they've been in (and left) or are attempting to be in fashion, though I prefer to believe they've escaped. (the difference being left-out or left-willingly, vs running away after being captured)

I've got a "Shrodinger's cat is dead" (with "not dead" on the back) shirt which helps me find interesting people (THE most random people understand it). I'd argue that's more useful than fashion (does it have a use?), and remember that stick-figure shirts occasionally explode in popularity (I remember a big burst several years ago). XKCD is just a superior-taste subset of those.

edit: heck, "fashion" hasn't served me too well anyway. I wore a blue-screen-of-death shirt to one of my interviews, and got the job. The interviewer called the boss in to laugh at the shirt :)

Fashion does have a use; the goal is to send social signals about status and group. While most people go way overboard and just follow along religiously, you too are in fact using fashion to socially signal like-minded people!

I wore an xkcd tie to prom with overwhelmingly positive response. Of course I go to a math/science magnet school (which really is just the high school where most of the smart people in the state go, regardless of their interests)

Why does taste have to cost hundreds and thousands of dollars?

> Why does taste have to cost hundreds and thousands of dollars?

Because part of the point of "taste" is to exclude others, or, if you prefer, to distinguish oneself (which is the same as excluding others). Money helps reduce the uncommitted.

Because it's completely subjective and thusly has no hard value, it's literally the same problem as pricing art. Consequently, you may as well charge 500-5000% markup.

Hmm, I thought that was the point. If that identical pair of boots were available at 19.99 no one would want them. (only slightly kidding)

Yeah, I was wondering if they actually made a mistake by buying it for that 49.99.

Welcome to HN, the meeting place of finest fashion tastes and trend setters.

I like 'em.

You like the boots, jrockway? You are my newest hero/hera.

Hah! I was indeed referring to the boots. :)

I love them. The price tag obviously bites but coupled with some slick jeans and a plaid shirt this would be irresistable.

It's hard to believe that charging over a thousand dollars for a single pair of boots is not a mistake. Especially when they wouldn't look out of place on Regretsy.

Dsquared isn't for those on student loans (or are?) but just wait until H&M pushes those on us for under $30. Fashion lacking copyright helps push innovation and stay away from bankruptcy.

1.6 million dollar loss is equivalent to 15% of Zappos' profit for the last year (cf. SEC filing http://phx.corporate-ir.net/phoenix.zhtml?c=97664&p=irol...). We shall see how this "materially important event" finds its way into Amazon's next 8-K SEC filing - investors have the right to know...

Sounds like a $1.6 million unplanned marketing event. I'd bet it pays off better than $1.6 million in traditional advertising.

Not really. A bunch of people got great deals but the blog post is from two days ago and I've yet to see any coverage in traditional media outlets. It seems like $1.6 million can buy much better exposure.

Two days ago was a Friday, I think it's a little early to judge the outcome of this.

No question that 1.6MM could definitely buy much more exposure (the end goal of this exposure being customer acquisition and sales). Don't get me wrong, they did the right thing--however, this is no "happy accident".

I had not even heard of the site before it was posted here. I'm almost ready to check out with a decent order.

Yep - we did a Zappos tour last week and judging from their culture they would view this as a great marketing expense in addition to "the right thing to do".

Also it's not fair to judge it by major media exposure because:

1. The people who got those deals will generate word of mouth

2. If they hadn't honored it it would have generated negative word of mouth

Gotta factor those two in.

Yes, but word of mouth is incredibly hard to measure. (twitter and social media helps a bit in this regard) What you can measure is broad media exposure, so this is what you look at as a measure.

The most important figures that one needs for management are unknown or unknowable,... but successful management must nevertheless take account of them. (W. Edwards Deming quoting Lloyd Nelson)

could it have been an intentionally planned ... mistake?

Anyone want to venture a guess as far as what kind of bug would cause a price cap like this?

Michael: "I must've put a decimal point in the wrong place or something. ----, I always do that. I always mess up some mundane detail."

Peter: "Oh! Well, this is not a mundane detail, Michael!"

Michael: "Hey, quit getting pissed at me. Alright? This was all your idea, ---hole!"

Peter: "Alright, okay, alright, let's try not to get pissed off at each other. Alright? Let's just calm down, let's try to figure this thing out together."

Pretty sure you can say "fuck" and "asshole" on the Internet.

Pretty sure I don't care to do that.

Anyway, downvoters, the quotes were an actual answer. It was probably some very minor detail that escaped notice until downstream effects (low price cap) made it evident. Without more information it's a waste of time to try guessing what that minor detail may have been.

An UPDATE sql statement with a forgotten WHERE clause

It does annoy me that the WHERE clause has to go at the end. I usually end up typing the WHERE clause first when working live on something important.

Same with rm -Rf /foo/bar. There's a moment when pressing enter will do the wrong thing. I usually use relative paths to avoid this, but I have had to repair the damage for someone who actually managed to rm -Rf / by accident due to this.

That is why I run a ls command before doing rm. (been bitten but accidentally hitting Return key instead of Shift on laptop :()

Also for Update/Delete query I run the equivalent select (rows or count(*) ) query first, just to make sure.

also make sure to write where predicate before completing the whole sql. (The sql does not go through by accidentally hitting enter, before the whole statement is written)

tl;dr - Run read operation before doing write/update/delete operations.

Doubt it, I'm really careful with updates and usually I only have a few hours work between me and fixing a mistake like that, not a million dollars. Maybe a certain discount was applying to everything, more likely that every actual price being changed in the db.

Wild guess would be they were using price limits to categorize. In other words, using "under $50" for various product or promotional listings.

It's hard to imagine how that would end up repricing items though. Without a total blanking out moment in the programmer's head, anyway, which I'm sure we've all been guilty of.

I really don't wanna be that developer or DBA whose lack of attention caused this. I work for an online retailer and obviously we live in fear of self-inflicted downtime. (That said, no business likes downtime)

Something along the lines of this, abstracted away a few layers, would be my guess.

    def build_query()
      "UPDATE prices SET price=4995 #{where_clause}"
    def where_clause() # only set prices on products in our group of stuff to sell
      return "oops, I'm accidentally an empty string"
Unfortunate bug causes method to fail silently, program does not crash, instead performs unfortunately incorrect query.

Perhaps they meant to cap prices at 5 thousand dollars but it turned out to be 5 thousand cents instead?

if price > $49.95 { price = $49.95 }

Excellent job, you've satisfied the narrow confines of the literal request while offering no insight into the actual thought processes or features that might lead to the bug.

And surprisingly, this is exactly how most bugs happen.

good PR vs $1.6M and bad PR. Any doubt what the zappos people would do?

Funny that they found the error at 6am.

Good thing that they found it that early too. May have cost them a lot more if they found it later.

Those of you looking at this and commenting are missing the number one question: Are you in business to just make money or to have customers? There is a very big difference there. How many of you have been "loyal" customers only to get screwed? And how really small and mean was that screwing compared to the future business you would have given that company -- and compared to the business you once did with that company?

I had a similar experience at Nalgene: they had published an internal 50% off staff promotion coupon. That coupon made it to slickdeals.net, and lots of people bought lots of goods. Nalgene honored the purchases.

The difference: what Zappos noticed in the course of six hours, Nalgene didn't notice from about Saturday afternoon 'till Monday morning.

Try getting Amazon.com to honor ANY price mistake.

In 10 years of shopping, it's never happened.

I got a ton of free toys and board games through ToysRUs.com (powered by the Amazon.com site) when I was in high school. Someone on the SomethingAwful forums had discovered a magic coupon code and we all benefited pretty nicely.

Consider it a good advertisement.

hmm, so maybe test driven development can actually save you big money

noooo freakin way, amazon.com would never let that kind of stuff happen.

In mid-2007, Amazon.ca listed Lisp in Small Pieces, an $85 textbook, for $3.95. A guy I know ordered it at that price and it was fulfilled without incident, so I posted it to my blog at http://xach.livejournal.com/133661.html - it quickly became the #1 seller on Amazon.ca for the day. Amazon cancelled the orders and gave everyone a $10 credit.

I tried buying a PSP kit that was mis-priced around Christmas time. They cancelled it and didn't give me so much as an apology or regret, citing their terms of service policy.

Also, what with the downvotes...

Technically, he did say "amazon.com" would never let that happen.

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