Legality of Price Checks Questioned
By George Anderson
Retailers have probably been checking and comparing the prices charged for goods by their competitors since the days of bartering, but advances in technology has led one retailer to claim in a lawsuit that another is engaged in “corporate espionage” and “stealing sensitive information.”
A grocer in Oklahoma, Super H, filed a suit in Osage County District Court alleging Wal-Mart workers were illegally scanning bar codes of items on its shelves.
The bar codes, contends Super H, contained information about its cost for the product, inventory levels and other data it considered proprietary.
The attorney for Super H, Gentner Drummond, told The Associated Press there was nothing illegal in Wal-Mart employees walking the aisles of his client’s store and noting prices. He contends, however, that Wal-Mart went over the line when its employees used hand-held scanners to capture information.
Judge John Kane IV agreed with Super H when he granted its request to prohibit the police from returning the scanner allegedly used in the incident to Wal-Mart. The judge ruled that preliminary evidence did leave open the possibility that Wal-Mart was stealing price code information.
“Wal-Mart is not satisfied by being the 800-pound gorilla,” said Mr. Drummond. “They are only going to be satisfied when they kill these little companies. They want to be the 1,200-pound gorilla.”
Wal-Mart denies any wrongdoing in the case.
Moderator’s Comment: What is your position on retailers’ use of scanners in doing price checks on competitors? –
George Anderson – Moderator
mfbenson has obviously never tried to do price checks in a Wal-Mart, they will “kick” you out faster than you can say, “Welcome to Wal-Mart. Would you like a cart”! If you speed and don’t get caught, are you doing anything wrong? Unfortunately, this is the nature of the business and I think, in the end, it will have to be up to the retailers to protect themselves in order to survive in a very competitive environment.
Is it any different than using a note pad and pencil? What would have been their position with that? Is this not information in the public domain?
I’m afraid our 1200-pound gorilla is not alone in this area. As we all know, collecting competitive intelligence covertly at the shelf has been a long standing practice in the retail industry. Wal-Mart has just moved it from writing information down on paper or sneaking pictures to a new level using technology.
Is Wal-Mart [less than admirable] for targeting a small, local chain? Yes. Are their practices any different than most other retailers? No. Just wait until the RFID codes start appearing and the creative espionage that will develop from them!
I would like to buy one of those scanners for my own personal use as a customer. I wonder how retailers would react to that? Sooner or later one would probably try to bust me for criminal trespass. I don’t see how the prosecution of that would hold up, or for that matter hold up against Wal-Mart. A bar code, after all, is just a form of language that is machine-readable but not human-readable. If retailers are going to put language up in their stores, can they really blame people for reading it, whether they are using a machine or not? It’s like saying customers should not be allowed to read the multi-language packaging on a product and stick only to their native tongue.
And, incidentally, Wal-Mart has a policy of allowing competitors to do price checks in its stores any time they want. There is, at the least, no hypocrisy here.
He sent his soul into the afterworld, some aspect of his price checking values to spell.
Soon a voice came back and said,
“You, yourself, are both heaven and hell.”
So he satisfied his curiosity by checking (and scanning) competitors’ prices … and then went to church on Sunday.
I’m not surprised when consumers confuse private places with public places, but it seems over the line for a retailer to think they have any right to privacy over matters that they display in a public place. If you reversed the names of the parties in this action (the little guy scanning Wal-Mart,) no one (except maybe Wal-Mart) would bat an eye. Case dismissed!!!
Has Super H ever heard of encryption? Why would you put all that data in there for anyone to read? Encrypt it! Or use IDs that tie into that data in your database. Sheesh.
Sorry to be less poetic than Gene (a perpetual problem I fear) but it seems to me that while the use of scanners was a little over the top, we have to adjust our idea of what’s enforceable. What’s the difference (in a practical sense) between using a handheld, physically writing down prices or using your cell phone to take pictures of a shelf? We live in an era where no secret is safe (like pricing was ever safe!). After all, a shelf price is a pretty public statement.
In my view, Wal-mart is in the wrong. I’ve been in Wal-Mart stores to check prices and must be discrete. More than once, my identity was checked to ensure I was not a competitor. Therefore, I disagree with Wal-Mart’s tactics to gain access to more than the displayed pricing information. However, I do agree that in the new world of technology, retailers will have to safeguard their date displayed on the shelf.
Just playing Devil’s Advocate, but do other precedents apply? How about privacy? If I leave my window shade open by a couple of inches, does that give someone the right to use a telescope to peep into my bedroom? The product is publicly displayed on the shelf, but by nature of the fact that I’m using a code (bar code) that requires an electronic devise to decipher it…seems to me I’ve set a reasonable boundary that should be respected. Deliberately crossing that boundary by using a reader specifically designed to “crack the code” would seem to be an invasion of privacy. (If you can read bar codes by sight and can’t help yourself, that’s a different story.)
If the question is what’s ethical, the answer is very simple: you don’t take what isn’t offered willingly.
If Wal-Mart asks permission to do price checks and grants reciprocity, all is well. If the local retailer refuses the request, Wal-Mart should respect that decision.
What’s legal isn’t the same as what’s ethical.
I’m surprised at how many people are ignoring what has really happened here. It was not just a bit of price comparison.
More than once, armed with the dual excuse of being a journalist and a consumer, I have flaunted my notepad and pen as I meandered leisurely up and down aisles. I have waited to be stopped and questioned (or searched). It has never happened. But I was merely taking notes on what was on public view. The difference, in this case, is that information on a bar code is CODED – it is NOT on public view. Deciphering a code does cross the line, I think, and is indeed more questionable than simply noting prices or appearance or range or merchandising patterns or anything else that either a professional or non-professional observer can see with their own two eyes. The use of technology in this case is what makes the difference.
I’m with Jeff Weitzman – I don’t understand how scanning the grocer’s bar code can give an external party any useful information other than what the product is, if that. Isn’t all the rest of it safely stored in their inventory system and POS pricing files? Isn’t that a lookup in a database? Why are they encoding that kind of information in a label, and how is it possible for W-M to know how to decode it? That concerns me more than the scanning in the first place!
Well, the solution is easy. Buy the product, leave the property, scan it and record it, drop off the product to a food shelter, use the data, get a charitable write-off. Life goes on.
And, Shame on Super H for not encrypting the data.
I want to walk those aisles and do some scanning myself. I did not realize that the retail industry was including pricing information on the actual I2of5 or code 3of9 barcode. Every location/sku barcode I have created was for the UPC or location, not the price. If the grocer is indeed including price on the actual location barcode, they should change their systems. A physical tag is required for shelf level pricing, and the barcode should be used for inventory accuracy. There are much cheaper ways to price than re-printing barcodes dynamically. The UPC should be cross referenced with the POS system to ensure accurate pricing for the consumer. Why would anyone put price on their physical barcode?
As a consumer, I have created a PDA program that tracks the prices of my frequent purchases (UPC and item description). With or without the device, I know the last prices paid at each of my favorite markets in my head. Am I now stealing proprietary information or am I a sophisticated shopper?
Secret shoppers have long been a staple in the retail industry, both for company owned stores and competitor formats. Did Wal-Mart cross the line by checking on the competitor? I say, no. Did Wal-Mart act unethically by using an electronic device to capture the data? Again, I say no. Just as my remembering the price, writing down the price or using my PDA to collect the price is not unethical.
Does the grocer have the right to limit the use of these electronic devices in their stores? Yes, of course they do (and the employees will probably use clear bags as purses and lunch containers as well).
The lesson to learn here is that not only should the retailers protect the privacy of their electronically gathered data on their customers, they should protect their own data. If, as a retailer, you do not like the competitors electronically collecting data on your store, then do not make it as easy as a single scan to acquire. Post a policy against such an electronic collection practice (however, I may stop shopping there) and educate your management on this topic.
Take Wal-Mart to court over this? I hope you have sufficient profits to cover the legal costs when you lose this battle.
I seem to have missed something. If the barcode that is being scanned is simply the UPC code of the product, how then is this an issue as Wal-Mart is simply using technology to help speed their task of checking competitive prices. In fact, last time Wal-Mart asked me to quit writing down prices in their store, they informed me that I am welcome to scan the products to collect the information but that I am not allowed to collect them with paper and pen.
If there is an alternate bar code that Super H is placing on their merchandise that contains links to other information, I am very concerned at how Wal-Mart has any idea what the information means and the matter should be investigated further to determine if there is some wrong doing. Either way, the prices are in the public domain and are fair game. If sensitive information is being placed in the public domain (assuming their stores are a public place with no membership requirements), then shame on Super H for being naive and kudos to Wal-Mart for finding and exploiting a competitors mistakes.
I would hate to see the day that price checks were outlawed as it seems to me that it creates a competitive environment where consumers benefit. I would much rather see time and effort put towards investigating the practice of predatory pricing that many larger retail companies (especially Wal-Mart) use to eliminate competitors and then raise prices in the absence of competition. In the realm of pricing ethics, I think using a scanner to identify items and check prices is just starting and there are much larger issues to deal with than using technology to accomplish daily tasks.
I disagree with the above comments. While I see their point, scanning a barcode is much closer to taking a picture than writing a price. Would a competitor allow me to come in and take pictures of their prices? Of course they would not. If someone wanted to write down the barcode number, there would probably be no issue. I think that it is the using of an electronic means to leverage the spying activity that makes it ethically questionable.
I actually think that competitors should not be able to come and record prices. If they get caught, they should be fined. If the employee can remember what they saw at a competitor, or if a consumer can remember what he saw at various stores, so be it. Spying on the competitor’s premises should not be allowed.
So as a consumer, if I walk into their store and write down prices, am I also breaking the law? If I take a picture of the bar code, and then decipher it later, am I breaking the law? If I can read the barcode without the aid of a computer, am I breaking the law (it’s time consuming, but doable)? If the information was displayed in Latin and I read Latin, am I breaking the law?
Where do you draw the line?
In my opinion, it’s the responsibility of the retailer to not display information that they want to keep private, or at least encrypt it. One retailer I know prints the margin on the tag, with the digits reversed; however, with today’s modern technology, why put the information on the tag at all?
They should just put a unique number in the tag, and use it to look up whatever they need with wireless systems. Trying to sue a competitor because they’re too cheap / lazy to properly secure their own data is not right.
If someone publishes information (and that’s what they’re doing), then fair use provisions of copyright law should prevail, and those allow collecting and reusing information in a different format – which is exactly what Wal-Mart’s doing.
This case should be thrown out of court.
Big Swede – I do price checks in Wal-Mart every week. Most I’ve ever had is a nervous associate calling their manager about it. Never been kicked out.
There are probably stores out there somewhere that do not follow the home office policy, but the policy is that Wal-Mart is supposed to allow anyone to do price checks.
The story summary is not clear as to what barcode is being scanned. If it is just the UPC, I can’t see how this is any different than any other price check. On the other hand, what UPC contains cost information? If pricing information is included in a shelf tag barcode (Supervalu does this), I can see their point but even this is hardly secret to anyone with patience and the barcode spec.
This is another example of industry players pretending there are secrets. Funny how we all know the inside scoop on our competitors and they don’t know ours. Must be because the DSD guy is our friend and would never gossip about us! I can go into their store undetected but they can’t go into mine. My customers will tell me if I’m out of line but their customers wouldn’t ever bother talking to them. My no camera policy is never circumvented but why can’t we do something like they did in this picture? Their employees shop my store but mine would never set foot in theirs. Isn’t self-delusion wonderful?
I don’t think many of you understand what Wal-Mart is doing. They are using a small, pen-size barcode scanner, picking the item up off the shelf, scanning it, and entering the price from the shelf. Example, Wal-Mart comes into our store, picks up Tide 100oz liquid; they scan the barcode. They press in the amount, and move on to another item. Once back at Wally-World, they send all the info and lower (sometimes raise) their prices. If you carry the same product as Wal-Mart, they can scan it, copy your price, and now you will lose sales. They have been in our store numerous times, and we kick them out when we see them. Different departments at Wal-Mart send employees out at different times to “price comp.” Yes, it is very good for consumers to have the best price, but when there are no competitors left, Wal-Mart will raise their prices in these towns. When we walk into a store and write down prices on paper, we are going to do a few items. Wal-Mart has the capability of scanning my entire inventory. I work at a chain retail store with over 500 stores and we have trouble with Wal-Mart every week. I hope Super H wins, and Wal-Mart will re-evaluate their policies.
I am curious about how this legally affects consumers. I have been trying to get a concrete answer to this question since we are about to begin collecting this information in nearby supermarkets.
I believe a consumer has the right to record, via any means, the price for a product in a store…whether it is pencil/paper, camera phone or key-fob scanner…particularly if only the product UPC is scanned. Technology just facilitates the same function we used to (and still) do manually. As far as the shelf tag information, I agree that anything the store considers competitive should not be displayed on a shelf tag in a public domain format.
As with the commentator with the price comparison PDA program, consumers want to get the most for their money. Why shouldn’t they be able to use modern tools to accomplish this?