Summary Blog

http://news.cnet.com/8301-10784_3-9797171-7.html

Summary

This article is directly related to Chris’s article that he found. Microsoft had a deal with Bestbuy. Microsoft would promote Bestbuy if Bestbuy tricked their customers into signing up for Microsoft’s msn internet service trial. The customers were then charged when the trial ended. A California man then had the courage to sue the company for racketeer influenced and corrupt organizations act, or RICO for short. James Odom stated that at the point of service terminals they scanned a CD and said it was for inventory control, even though they had another way of counting inventory. In reality though, what they were actually doing was signing the customer up for the Msn internet trial. No customer got a complete refund and both companies deny and wrongdoing.

Connection

This article relates with everything the text had taught us about accounting; everything from sincerity to cold hard evidence. The Generally accepted accounting principals, or GAAP as many call it are basically what the text book is pushing on us, directly or indirectly. The Principle of Sincerity states that the accounting unit should reflect in good faith the reality of the company's financial status, but during this time Bestbuy and Microsoft have altered documents disproving this. The Principle of non-compensation says that one should show the full details of the financial information. Looking at the article the comparison is clear. The Principle of Prudence says that the company should show what reality really is. Again this scam breaks yet another GAAP. Finally one of the most important rules; The Principle of full disclosure/materiality says all information and values pertaining to the financial position of a business must be disclosed in the records. Even though they had this cheat written on paper, it really wasn’t what they said it was thus making what they wrote flawed.

Reflection

After reading the two articles I don’t feel safe buying from any store anymore. I’m the sort of person who always uses plastic to buy my things rather than money. Using a card seems safer but now it just feels like I could get cheated anytime anywhere. Thinking back it seems like a lot of people prefer using a credit or debit card over using pure cash. If you think about it a lot of people do use a card and BestBuy is a chain corporation world wide. Put one and one together and you get many people falling for this scam. I might not know how much the companies made off this, but I would guess somewhere in the millions just because of this one reason.