Wal-Mart closes loophole on PlayStation 4 scam

Fake product listing scams Wal-Mart
Fake product listing scams Wal-Mart   

No more super-cheap PlayStation 4 consoles. Wal-Mart has locked down its price-matching policy to prevent fraud.

After Wal-Mart announced Nov. 13 that it would price match select online retailers, including Amazon.com, several customers used the program to buy $400 PlayStation 4 consoles for under $100 using fake Amazon listings. Twitter and Reddit users posted pictures of receipts documenting PS4 prices as cheap as $90. CNBC.com spotted more evidence of the fraud on Twitter Wednesday, including more pictures of receipts for $90 PS4s and others for a $100 Xbox One console and games.

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Wednesday afternoon, a Wal-Mart spokesman told CNBC that the retailer's policy has been updated as a result of the fraud. The updated policy on Walmart.com notes stores will not honor prices from marketplace vendors, third-party seller, auction sites or sites requiring memberships. "We can't tolerate fraud or attempts to trick our cashiers," Wal-Mart said, in a statement. "This kind of activity is unfair to the millions of customers who count on us every day for honest value."

Earlier in the day, several users also tweeted (unverified) pictures indicating stores were starting to pay attention. One showed an in-store sign stating that Amazon.com PS4 ad matches will no longer be accepted "due to fraud." Another user's picture showed updated match requirements, including listings sold and fulfilled by Amazon and verification for any "huge" price differences.

In an unfortunately timed announcement, Wal-Mart also announced Wednesday that starting Nov. 21, it will match or beat select Black Friday offers from competitors—including one on the PlayStation 4. (It did not detail which retailer, or price, it would be matching.)

As CNBC.com reported earlier, any Amazon member with a registered selling account can create a product sale listing. Perpetuating the fraud requires only a screen capture of the listing to be shown at checkout to request the price match. Amazon did not respond to requests for comment about that capability.

Wal-Mart's woes raise the question of how stores will verify matches amid the growth of online marketplaces that let third-party sellers set their own price, said Haydn Simpson, head of brand protection for consulting firm NetNames. Even if the listing is real (as in, the seller has product to sell), counterfeits and grey-market goods are fairly common—and usually bear lower price tags. "This shows that consumers are clever enough to understand how they can take advantage of that," he said.

It's only in the past year or so that stores have begun accepting online prices for price matching offers, but it's usually a select list of retailers rather than a blanket online match. (In 2013, Target announced it would expand its policy to include Amazon.com, Walmart.com and others.)

Fake online listings are a new twist, but price-match fraud itself isn't new. "This is one example of the many unethical and even illegal methods that some consumers use to game the system," said Joe LaRocca, president and founder of RetaiLPartners, a retail consulting firm that specializes in loss prevention. During the 2013 holiday season, retailers lost an estimated $3 billion to fraudulent transactions, according to the National Retail Federation.

Wal-Mart is no stranger to such scams. Last year, residents in Michigan and Pennsylvania were arrested after they abused the retailer's price-match as well as its coupon policies—using high-value coupons on lower-cost items to net cash "overages" under the policy. The Michigan culprits stockpiled an estimated $100,000 worth of health and beauty items over six months and tried to resell them out of their basement.

Usually, though, retail experts say it's not so easy to claim a price match. "It is generally a hassle because usually either the store clerk or the cashier is not authorized to approve the price match," said Edgar Dworsky, founder of advocacy site ConsumerWorld.org. "You have to call over the store manager or a supervisor."

More common, said Brent Shelton, a spokesman for deal forum FatWallet.com, is taking advantage of temporary retailer loopholes, like a pricing error or vague policy wording. Other common scams include price tag or sticker switching among items in the same category, said LaRocca, so products appear to be much cheaper than they actually are. Some fraudsters will then return the item at its real price or sell it on the secondary market, netting a profit.

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But make no mistake, retailers are watching. Return and purchase patterns are often tracked, said LaRocca. That can lead to repercussions for individuals customers (no returns accepted, or even an arrest), as well as broader policy changes. "When they identify abuse, retailers reserve the right to shut that practice down," he said.