October 27, 2021

Gary Weiss

A Walmart Sticker Leads to California Lawsuit Against Overstock.com

~ UPDATE includes link and quote from Overstock.com’s press release responding to the suit.

Gary Weiss is all over the $15 million lawsuit brought by seven California counties against Overstock.com today, noting that this could be a helluva problem for our fave SLC problem-child:

The counties had offered to settle with Overstock for as little as $7.5 million, but Overstock refused. No wonder: if the company had coughed up such a substantial amount of cash, it probably would have been driven into bankruptcy.

The suit came out of some alleged false comparative advertising claims (e.g. think Crazy Eddie commercials) including this one that got investigators on the case:

It was a Cottonwood man’s complaints about the firm that persuaded prosecutors to investigate the matter, said Erin Dervin, a Shasta County deputy district attorney.

In 2007, Mark Ecenbarger bought a patio set for $449 on Overstock. The website claimed the list price other companies were charging for the set was $999.99.

But when the furniture was delivered, there was a Walmart sticker on the side of the box showing the set was really worth $247.

Naturally, Overstock is saying that this one big misunderstanding and that isn’t how they do business. The prosecutors aren’t convinced:

The suit claims Overstock often outright makes up its list prices and compare-at prices based on arbitrary markups over the firm’s cost for the product. In many cases, Overstock entirely fabricated a fictitious comparison price and then claimed it was discounting that price, even when it was the only seller of the product, prosecutors allege.

You would think that such a troublesome lawsuit would cause havoc on the company’s stock price, wouldn’t you? Nope. Gary explains:

The reason for that is simple: fraud is already incorporated into the share price. This company is under SEC investigation for systematically cooking its books. Why should consumers be treated any differently than shareholders?

UPDATE: Full statement from Overstock is available although Patrick Byrne is MIA:

“Overstock.com stands by all our advertising practices, including providing comparison values which we thoroughly explain on our site. We have been singled out for standard industry practices, which we look forward to demonstrating in court,” said Jonathan Johnson, President of Overstock.com.

The Big 4 Abbott & Costello Routine

“Do you want 7 to go into 28 a total of 13 times? Sure. Just hire a Big Four auditor, and he’s got a rubber stamp with your name on it.”

~ Gary Weiss thinks auditors are a joke.

Sam Antar Respectfully Requests to Be Included in the Overstock.com Earnings Call

Sam is certainly as insightful as the Easter Bunny:

From: Sam E. Antar

To: Patrick Byrne
Board – Jonathan Johnson
Joseph Tabacco

Dear Patrick Byrne and other persons from Overstock.com:

Overstock.com’s Q2 2010 conference call is scheduled for today at 3 PM ET. I will be calling in. I expect to be permitted to participate in said call and ask relevant questions about Overstock.com. As I recall, in 2005 you allowed a lay person named Phil Saunders AKA Easter Bunny to participate in the call.

Sam E. Antar


Gary Weiss predicts that Sam won’t be allowed to participate but stranger things have happened (e.g. Overstock turned a profit last year).

Earlier:
Remember the $3 Million in Overstock Shares Patrick Byrne Sold? Sam Antar Does

But Spongetech Execs Aren’t Used to Handling Bar Soap…

“Spongetech’s masterminds are going to prison. File that under ‘unfinished business.'”

~ Gary Weiss, on Spongetech executives who were arrested yesterday for securities fraud and obstruction of justice.

Quote of the Day | 01.26.10

“The problem with dumping him at this stage is that it won’t really get to the heart of the matter, which is that he’s just one of a cast of characters who need to be ousted. The problem is the ensemble. I think it’s a bit like you’re not liking the cast of Seinfeld, and just getting rid of Elaine.”

~ Gary Weiss on Ben Bernanke, et al.