Since we published our article about Office Depot associates lying to customers last week, the company has issued an internal memo "reminding" employees not to lie to customers about notebook stock. We've also heard from and interviewed a number of additional Office Depot employees from different stores in completely different parts of the country who corroborated our primary source Rich's account and added more detail, including new allegations that some associates alter the price of clearance items to include the cost of Product Protection Plans or Tech Depot Services. In addition to the myriad e-mail tips and blog comments from different sources claiming to be Office Depot employees, we've now interviewed five people (four current and one former employee) from five different states and have been able to verify the employment for four out of those five (the fifth gave us his name and region but said he was too concerned about losing his job to provide a paystub or let us contact him at work). This leads us to believe that the practice of deceiving customers has been common, widespread, and not just limited to one rogue store or region. (Update: After speaking with a senior official from the Federal Trade Commission, we can also confirm that Office Depot is violating federal law.) "I can personally attest that everything in this article is 100 percent true," posted a reader who asked to be called Mike. "I have had various managers (including my store manager) insinuate, if not flat-out tell me, not to sell items to customers if they aren't going to get any attachments ... The managers would much rather us sell 3 laptops, a PPP, TDS, and case than a hundred laptops with nothing." Though Mike's comment was posted anonymously on our blog, we subsequently conducted a phone interview with him and verified that he currently works at an Office Depot in the Western U.S. Alex (assumed name), an Office Depot employee from another state, told us that lying about notebook stock was common not only in his store but also in at least a dozen other stores in his area:
One scenario in the tech department: I'm putting signs up ... and a customer comes in and says 'I just came from another store. They said you have this [notebook] in stock.' So I'll go and check it real quick and sometimes I will have it in stock, sometimes I won't—and that is actual information. Sometimes I just don't have it in stock and the other store lied to them. I'll ask them first: 'Where did you come from?' And they'll say what street or what part of town they came from, and I know all the store numbers so I pull it up and I can check their inventory in real-time and see that they have them [the notebooks] on hand and then I'll ask them [the customer] did they talk to you about extended warranties or services and they'll say 'Yeah, yeah. I don't need any of that. I just need a laptop.' Then I know that's what they did ...
The other store will have it in stock, but send the customer to us, just to get them out of the store like they're doing them a service. [They'll say something] like 'Hey, I don't have it, but they do and I really want you to get this laptop,' so they can save their own store's numbers."
Price Altering Alex claimed that, at his store and others in his area, it's common for sales associates to add the cost of a Product Protection Plan (PPP) or Tech Depot Service (TDS) into the price of clearance items, without telling the customer. "The out-of-stock thing—that's small beans compared to the other stuff that happens with the customers as far as price altering," he said. He added:
We have clearance machines that we still have in a box. They've gone clearance. Let's say the original price was $599. However, the clearance price has now knocked it down to $499. When you print the price up, it's only going to print the price that's in our system, which would be the $499.91 or something like that. A tech service is $100. A warranty is going to be a little more expensive, like in the $150 range, so they're not going to mess with the price that much.
[Rather than post that price,] What we'll do is that I'll go to the copy and print center, get into Photoshop, take one price tag that was $599 from another item in the store, cut out that area of $599 and position it exactly where the $499 price is in the current tag and then run that price through some card stock and cut the paper out in the same exact size as what's called a 'fact tag' in our stores. And now that's the price. It's legit.
Alex said sales associates at his store are instructed to pitch tech services and warranties with these marked-up clearance notebooks, and that if the customers refuse to bite, they should say their manager is letting them "throw it in" for a current so-called promotion. The customer doesn't know that they are actually paying the $100 for that service, because they think it's part of the notebook's price. What if a customer buys one of these marked-up notebooks and says yes to a service plan? They pay the same $599, but it's itemized as $499 for the notebook plus $100 for the service plan. "Then we'd say the price [on the notebook] must have dropped, it just went clearance right there at the register," Alex said. Though Alex said he did the Photoshop work himself, he told us that his boss encouraged him and praised the results:
My manager comes to me and says, 'You need to do whatever possible. We have a lot of clearance machines. You need to get that price figured in with the clearance models so that's what they're gonna get.' If you buy a clearance laptop that's on display, you get 10 percent off of whatever the lowest price is that's on there. On clearance laptops, a warranty is only $80. So if a laptop is $799 and it's clearance, obviously 10 percent is going to be $80 so they're going to get a warranty with it. We won't tell them about the price change. We'll just say 'Hey, a warranty comes free with this, because it is clearance.'
Now my boss says, 'You have to do whatever it takes to get this price in it.' I go to Photoshop, do it—he comes in and says 'That's beautiful. I love it. Do it to all the other ones.' He then goes to another store manager that he can confide in and says 'This is what we've been doing. This is helping us a lot.' That store then goes to do it.
Alex said that his store never marks the price up higher than it was before clearance. If the cost of a warranty of tech service they want to pitch is greater than the difference between original and clearance prices, they will pitch the customer that service at a reduced price. So, if a $500 laptop is on clearance for $450 and the store wants to sell the customer an $80 PPP, they will tell the customer that the laptop is $500 and try to sell the PPP for $30. He noted that, while his store and the other stores in his area that learned from them are the only ones he knows of that Photoshops price tags, he believes that it's common practice to give customers a higher price on clearance items so a warranty or tech service can be included. "So many people do that," Alex said. "If it's clearance, then they're adding something to the price and you don't know it. Always." How to See the Right Price Alex suggested that shoppers can use the in-store kiosks to type in the SKU of a notebook they're interested in and get pricing (but added that customers may only have access to the current price, not the lowest-possible-price information). "In most cases ... if I Photoshop the price $100 more and they key that SKU into the system, they're gonna see it's $100 less." The kiosks are not always labeled properly or available, Alex warned. "All the little kiosks in the store are supposed to have a sign around the monitor that says 'check inventory here' or 'shop online here.' Our store is told not to put that signage up, that it's just for employees." Office Depot's Internal Reminder: Will It Work? On Thursday, March 12, two days after we published our original report, Office Depot issued an internal memo to its employees, telling them not to lie to customers about stock. Labeled as a "Sales Practices Reminder," the memo informs employees that "under no circumstances should a Sales Associate refuse to sell any product because the customer is not interested in purchasing a PPP for that product" and warned that termination or other disciplinary action could result from a failure to follow the reminder. According to Mike, the memo appeared on the homepage of the internal "store portal" Intranet, but didn't get much attention at his store. "It only stayed on the front page for about 24 hours or so," he said. "If I didn't check the store portal daily (which isn't usually necessary for nonmanager associates), I would have never known about it. I don't think any other associates knew it was there since its not really necessary to check there, again the managers were supposed to go over it with us personally, as you can see, but no one had mentioned it to me." There's no word yet from our other sources about whether the memo is having an impact or not.