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Supemarket giant Tesco made a pricing cock-up on its website yesterday, offering an Xbox 360 bundle, normally priced at around £350, for just £33.

Quite the bargain, but rather weird when you consider that Virgin and Woolworths both replicated the exact same mistake...

Links to these super-generous offers were soon spread around the web, and, judging by sites like MCV, hundreds of Christmas shoppers thought they had grabbed the bargain of the season.

Unfortunately for these shoppers, the retailers woke up just in time to spot the problem, and have cancelled the orders. Harsh, if you're a bargain hunter. Oh cruel winter!

How did the retailers get away with the mistake?
Here's the thing with buying stuff online. It is commonplace for online retailers to cover their backs in the case of errors like this. They do this by, it seems, signing up to 'The Postal Rule'.

In law, The Postal Rule states that contracts become valid once they've been sent through the mail. Online retailers appear to have adopted this for their terms and conditions, with the contract formed once goods are despatched, rather than at the point where a shopper pays for it. And since Tesco et al spotted the error before despatch, they managed to swerve a bullet.

According to Struan Robertson, a technology lawyer with Pinsent Masons and editor of www.out-law.com:

"Pricing errors will happen occasionally. It doesn't automatically follow that consumers can take advantage of the incorrect prices, though. The smart retailer will protect itself against pricing errors by dealing with them in the terms and conditions and the automated order acknowledgement and making sure the conditions form part of the contract with shoppers."

All three retailers involved in the Xbox screw-up have terms and conditions which state that orders can be cancelled in the case of pricing errors. Smart.

In Tesco's case, its conditions include this (pretty clear) statement:

"There will be no contract of any kind between you and us unless and until we actually dispatch the goods to you. At any point up until then, we may decline to supply the goods to you without giving any reason. At the moment that the goods are dispatched (and not before), a contract will be made between you and us, and you will be charged for the goods."

For other retailers, Robertson reckons "this is the right way to protect against pricing errors in a set of terms and conditions".

Damage Limitation
'Customers' who thought they'd bagged a real bargain will be disappointed, but presumably the retailers will have let them down gently...? Actually no, the messaging seems a bit harsh.

In the case of Woolworths, customers were sent an email to advise that the order would not be processed. However, the email started off by informing customers that:'You will be unable to reply to this email', which is the first thing I'd have wanted to do after being told that I hadn't saved myself £300 after all. 

Secondly, the email didn't even address the specific mispricing issue. It was a standard email outlining seven possible reasons why their order had been cancelled, none of which mentioned a pricing error. Poor show.

Tesco's press office, meanwhile, refused to discuss the issue or how it intended to respond to purchasers. Also poor show.

The reason
Nevertheless, it's clear that three retailers wouldn't have chanced upon making the exact same error, so what was the link?

The link is Entertainment UK, which distributes entertainment products to several large UK retailers (presumably that includes product page copy / pricing / metadata / images etc). Woolworths, which owns Entertainment UK, confirmed that it was the source of these pricing errors.

Such mistakes, as well as the kind of discount voucher errors made by Littlewoods and Hamleys in the past year, are bound to happen, but it is important to deal with the PR fallout that can result from so many disgruntled customers.  

We've yet to see how Virgin and Tesco have informed buyers of the Xbox bundles, but Woolies' email is not a great example. An apology, and perhaps a discount off the next purchase would have been a much smarter way of dealing with this kind of issue.

Related stories:
Littlewoods hit by latest discount mishap

Graham Charlton

Published 9 November, 2007 by Graham Charlton

Graham Charlton is the former Editor-in-Chief at Econsultancy. Follow him on Twitter or connect via Linkedin or Google+

2565 more posts from this author

Comments (25)

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Anonymous

Fair enough the pricing was provided from Entertaiment UK for Tesco's, worthless and Virgins, but it's funny how the description/pricing were different on all three sites. It could possibly be a scam for users to open accounts. I've never used Tesco's Direct before but a deal like that made me leave my details.

about 9 years ago

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Tom

What about Tesco pre-authorizing your debit/creditcard for the amount?

Surely thats a signal of their intent to enter into contract to supply the goods?

about 9 years ago

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Jason

My order did not get cancelled with Woolworths (as stated above) and is expected to be in stock today.

about 9 years ago

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cheryl gauden

they took 2 payments from my bank for the item and yet no phone call or anything do we have a chance of getting them?????????????????

about 9 years ago

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Qez

Surely if Tescos realised their mistake they should alert & refund their customers ASAP. They were very efficient when removing the ad online but unfortunately the same cannot be said about their Customer Service.

about 9 years ago

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Mitch

Like Tom said, surely taking the money from your account activates the 'contract'. Can they just refund the money without your permission? If not, can we refuse the refund? Then what?

about 9 years ago

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jamie

i'd love them to be forced into it after taking my money however i am very skeptical and i expect they will contact me to refund me.
no harm in grasping those thin rays of hope though!

about 9 years ago

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LobsterMan

I have not received an email to my address i registered with that my order has been cancelled. If they have cancelled my order without letting me know it is scandalous! A person i know was told that his order was out of stock so he wont be receiving it - He replied that surely if they are out of stock you will send one when a new batch is received. What is the point in lying about their mistake!

Fair enough about the mistake but have decency and send an email alerting us of their mistake and their next action. ALl they have done is lie and ignore!

Faceless company tarts

about 9 years ago

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LobsterMan (PEZ)

...and also surely the trading standards superscede their silly T's and C's.

It is unreasonable to sell something and then just cancel the order. A mistake is a mistake how can they go back on their selling point principles.

I suppose i deserve it as im a greedy bugga - i already have an xbox! hahaha

about 9 years ago

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jamie

Dear Mr Bustin,

Thank you for you recent order for the Wireless Entertainment Pack from Tesco.com

Unfortunately, there was an error in the product details at the time that you placed your order, the Wireless Entertainment Pack does not include an X Box 360. As a result we have had to cancel your order. Please refer to our Terms and Conditions on the Tesco.com entertainment site for further details of our order acceptance policy. We apologise for this error.

We note there may be customer interest in purchasing the Wireless Entertainment Pack including an X Box 360. We are currently working hard to offer our customers an increased range of bundled products. We hope to have these available on Tesco.com Entertainment in the near future.

Visit our site

Kind Regards

Tesco Customer Services

is this allowed?

about 9 years ago

Joe Friedlein

Joe Friedlein, Director at Browser Media

What has amazed me is how many sites linked to the offer on the Tesco site. I must have seen it at least 10 times on various forums that I regularly read in the past couple of days.

Cue the light bulb moment...

If I was an online retailer wanting to create a bit of buzz and a boost in my inbound links (I am wearing my SEO hat), why not create an offer that is too good to be true, let it loose on some prominent forums and then sit back and watch my inbound link total rocket?

You can then walk away from actually honouring the deal by using the postal rule approach. Net effect would be quite a few disgruntled non-customers but a huge amount of links and a healthy amount of promotion.

Reminds me of the Threshers 40% off coupons. Accident or clever marketing?

about 9 years ago

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Mike

WHAT IF the offered pack was SUPPOSED to include an XBox and that the AUTOMATIC price tracker at Tesco INTENTIONALLY set the price to be lower than the competition (Virgin - where the mistake originated from) ?

I'm sure there would then be some liability under some consumer misrepresentation act or other ?

I see that they have not implicated themselves by offering a similar bundle at the correct price !

about 9 years ago

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XBox wizzie

hmm

My mail from them states that there "was an error in the product details" that the wireless internet pack "does not include an XBOX 360"

Interesting to see that there's nothing on there regarding an incorrect price, but that the package doesn't include the stated contents.

I'm no legal dickie, but I guess one would have to prove that the bundle does normally include the XBOX. How could you have an internet bundle without an internet device?

about 9 years ago

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jimbobaroony

boycott tesco - simple

"oi tesco? where's my xbox?"

about 9 years ago

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disgruntledxboxbuyer

well, well well.

I'm wondering how a wireless entertainment pack doesn't include the one thing you need to enjoy the entertainment, an XBOX!!!! and even if the pack wasn't supposed to include the XBOX how come they were able to offer a wireless controller and two games which should retail at well over £100.00 for £33.24 anyway?
It sounds to me like they've cocked up big time and don't want to admit it and would rather mug off the general public and cancel everyones orders than save face and admit there blunder. Surely it would be better customer service to keep us all happy by fulfilling the orders and not breaking the contracts of sale in which they entered.
If a price is advertised and I agree to pay that price and my offer is accepted by confirmation of order then surely a contract of sale is in place?

Send me a Xbox or the six I ordered(hee hee!) and I'll shut up, don't and I'll pursue this to the courts if I have to!!!

Lets get together and give them what for!!!

Lots of Love
A pissed off TESCO customer.xxx

about 9 years ago

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james firth

I totally agree disgruntledxboxbuyer, surely that Tesco acknowledged the oredr they were intending to fulfill the order!!

I would love to give them what for, although i am not sure we would get very far!

I thinl it's about time they start 'investing' some of their enourmous profits in their LOYAL customers........what can we do!!!!

my oredr was accepted, the delivery date changed from 16th to 9th \november and conviniently they have not stock?!?! surely they should fulfill the order when the stock arrives at their depot? I am very sceptical about how they have handled the whole situation.......what's the next steps?

about 9 years ago

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sammyb

Oh come on you people, you all knew it was a mistake, they have covered themselves in their terms and conditions so theres nothing you can do, you should have read terms and conditions before ordering if that was the case, its not as if you all queued up for days outside or something and they cancelled the offer

about 9 years ago

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DAMHEF

LobsterMan writes;

"...and also surely the trading standards superscede their silly T's and C's."

Yeah, if there was such a thing as "the trading standards" I'm sure they would.

I think I served you once. You know your rights. :-)

about 9 years ago

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Mark

"There will be no contract of any kind between you and us unless and until we actually dispatch the goods to you."

I wasn't aware that Tesco were in a position to decide what constitutes contract law?

I thought that was the remit of Parliament and the legal system?

about 9 years ago

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neil

So how come they can take OUR money at point of sale yet only be obligated on dispatch??

about 9 years ago

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Bagofants

The Postal Rule refers to the contarct being posted - except these days an email is legally regarded as equivalent to a letter, so by sending you a confirmation email, (and charging your card) a contract is made and therefore they are obliged to fulfil the order and although I'm sure many consumers will accept their wriggling out of it, it would be interesting to see how it stands up in a court of law.

about 9 years ago

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Bagofants

Oh, and they might have 'covered' it in the T&C, but the T&C can't get around the law. It's like telling someone you're about to punch them - yeah, you gave warning, but doesn't make it legal.

about 9 years ago

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Aled Evans

It is a heartache that many of you didnt get the xbox you wanted. But this particular part of the law is very hazy. There is no law on electronic contracts and the postal rule, so the practitionares and business' haven't a clue which way a judgement would go in a case.

But the academic opinion on this is such. To have a binding contract under english law you need (in the simplest form) Offer and Acceptance. Under English Law the customer makes the Offer to the online retailer and thus it is up to the retailer to accept by communication or conduct or decline the offer. So if the T&C's state that there is no acceptance until they despatch the goods (this is their conduct). This is the loop hole they are using. However their T&Cs are likely to be in contrevention of EU Law which states that a receipt rule must be used in concluding the contruct = http://www.opsi.gov.uk/si/si2002/20022013.htm S10.

What is interesting and there may be a point to be made is that the withdrawl of funds from your credit/debit cards, could amount to conduct?? It is possible.

almost 9 years ago

Chris Lake

Chris Lake, CEO at Empirical Proof

Thanks for the insight Aled - 'hazy' is the right word.

This stuff doesn't matter *too* much, so long as customer expectations are being managed. In this case, as you can see by the above comments, expectations have been trashed...

c.

almost 9 years ago

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Aled

If there's proof that they misled consumers by only putting such a low price on these products to gain search engine rankings then there is a possible criminal conviction. Check out Part III of the Consumer Protection Act 1987. action would be taken under the Trading Standards Authority, if found guilty of a breach the retailer could face a fine of £5,000 per consumer :)

almost 9 years ago

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