Microsoft Refusing to Take $10 Million Worth of Defective 360s from EB Oz?

Microsoft Refusing to Take $10 Million Worth of Defective 360s from EB Oz?

ebgames_logo.jpgUpdate 1: Microsoft has responded to our request for a comment.

Update 2: EB Games Australia has commented on the rumour.

Over the weekend, a Kotaku AU reader sent through a chat log containing an enlightening conversation with “an associate of mine who holds a high position within the EB organisation”. According to the log, Microsoft is refusing to take responsibility for its defective consoles, leaving it up to the games retailer to make the best of a crappy situation.

Obviously we’re trying to verify the facts, but for now, there’s no reason not to let you guys know of the potentially nasty relationship that may exist between EB Australia and Microsoft.

The transcript had the following preface:

An associate of mine who holds a high position within the EB organisation (Who wishes to remain incognito) has requested that I send in a paste [of]this chat log that details a stand-off between EB Australia and Microsoft regarding faulty XBoxes.

Mysterious, no?

It gets better, after the jump.According to the transcript, EB Australia has $10 million worth of defective Xbox 360s gathering dust, as Microsoft is unwilling to take them back. As a result, EB is no longer stocking the 360, except as second-hand or pre-owned units. A search of the EB Games website for “xbox 360” confirms this.

“There have been threats of EB dropping the Xbox range all together,” says the transcript.

To recoup its losses, EB is trying to repair the defective units and offer them as second-hand. However these units are often returned dead, the transcript states. It also mentions that EB lost $85 per console sold once Microsoft introduced the standard three-year warranty, as EB was unable to offer its own.

“Add to this the fact that price matching got really cutthroat during this past Xmas, they were selling far too many units under-cost and getting a bunch back defective, but Microsoft [refuses]to reimburse for,” the transcript says.

“The whole 360 RRoD [has]been extremely costly to EB Australia.”

“Feel free to believe me or not but go and ask a local EB if they have or when they’ll be getting in 360 Premiums again and nobody will be able to give you a straight answer except along the lines of ‘sold out’ and ‘don’t know when they’re coming back in’.”

This morning I rang up three separate EB Games stores in and around the Sydney CBD, and all provided a variation of the words “out of stock”. One mentioned that it was waiting for Microsoft to send through more.

If all this turns out to be true, it’s a rather damning look at Microsoft’s commitment to retail, not to mention the reliability of its own console. And a major chain like EB not stocking the Xbox 360, with the potential to pull down all related stock, is a huge deal.

Never fear – we’ll be chasing this up with Microsoft to see what its side of the story is.

Update: Looks like EB still has the Premium listed. Sadly, this doesn’t change the fact that the stores I contacted were out of stock.


  • Then again, EB games screw over Microsoft and the games industry in general with their pre-owned pawn shop sales scheme. I used to place them on a pedestal for all my gaming needs (damn teenage naivety), but now I’m pretty much exclusively JB Hifi.

    I’m not really a fan of any retailers anywhere though, given how much extra we have to pay for our game anyhow. How US$60 = AU$120 is beyond me. It’s even stupider when the price premium is maintained on digital distribution (cough certain steam titles and the entirety of the THQ catalogue, or lack thereof).

    All in all, we get raped by retail regularly. I’m quite happy to see the same happen to them once in a while. I doubt it’ll come to stock getting pulled though.

  • It should also noted that brick and motar stores in au and company websites are rarely ever in sync, so whilst your probably right Liars, it by no means confirmation.

    Yes its ture EBs business model fucks over the industry, but they WERE offering extended warrenties for a faulty console BEFORE the manufacture itself. So its not like they are completly evil or anything.

  • Thank God I got rid of my 360 and went with the PS3. I’m sick of hearing all these horror stories about how these blasted consoles are crapping out all the time. It was the last straw for me when my Oblivion GOTY disc just point blank refused to play anymore.

  • Its EB’s own fault for doing a recall themselves rather than letting the Microsoft system do its thing.

    Interesting to see what the deal is.

    Oh, I’m on my launch console and its still going strong.

  • I fail to see how this is Microsofts fault.

    EB were offering extended warranties that wouldn’t be honoured by Microsoft, and therefore left themselves open for some serious dead hardware stock.

    Microsoft also handle all warranty requests themselves, and don’t deal warranty with retailers…

    So basically, the way I see it, EB set themselves up to be screwed, and are now crying because they actually GOT screwed, and realised it was a bad idea.

    EB have been the bane of real gamers worldwide for sometime now anyway. Serves them right.

  • I know a few people who bought 360’s from EB had died and all of them were directed to contact MS directly for repairs.

    I honestly dont care one way or another, so i could be wrong and EB’s policy on this might have changed over time but if they dont accept the returns directly, its hard to see how this is true.

  • WHATEVER, the reason why they would refuse to take them might have something to do with the fact that all those consoles were sold with “extended warranties” from EB. This means that they got the cash from the customer, and that makes it their problem, not Microsoft’s. You can’t expect MS to sit back while they make all that money off those extended warranties, then lose tonnes of money replacing them. The extended warranty business is a gamble, and now because EB actually lost some money on them they are pissed and want their money back. TOO F***ING BAD. EB sucks anyways and rip everyone off with their trading. Sheesh I trade in a game, get maybe $5 for it, then they turn around and sell it for like $20+. I trade the same game at Blockbuster and I get 15, and they sell it for 30, it’s a hell of a lot more fair. to to hell with EB

  • I have been waiting since the 9th of December for my local EB to get fresh stock in! Have paid in full but was only offered a mid 2006 model (which I refused as I need HDMI).

    I keep getting told they are waiting for more stock to be delivered. They have had 2 deliveries of Elites in this time but no more Pro SKU’s! Getting rather put out by the long wait!

    This new bit of information sheds light upon why I can’t get a current model and why EB is always saying they do not know when they will get stock. I was also told that EB feel Nintendo treat them best while they feel Microsoft favour GAME!

  • I can’t remember the exact laws, though I think that if you return a defective product 30 days after purchase, the manufacturer is able to request that the owner return the product directly to Microsoft (or any other maker).

    Thus, if EB have been swapping over 360 units themselves (which I think they have been), then they have simply been screwing themselves over.

  • as i have been saying all aliong to anybody who listened to me. I never bought a 360, won’t buy as ps3 or wii. I have a PC console hooked up to my tv and until someone actually makes a decent console I will stick to this. The only good thing about the 360 is the game controller and the hd-dvd add on because they work on my PC.

  • the problem with eb games as well, they buy all dead units and then try to get them repaird from M$, it is knowlage here in austrlia among the modding comunity that alot of units here are infact referbs sent out to austrlia and as as new units ,(you must remember that austrlia and asia being last countrys to receive these consoles world wide for good reson)what better way to dump your defective stock!
    ferther more ,has anyone opened there repaired 360 from m$ to find its not even there original hard ware !,infact you find out you got a repaired replacement !,what sort of warrnty scam they pulling !any outher company would replace defective with new parts !.but not M$.

  • To utopaline:
    Firstly, it’s called ‘making a profit’. retailers do it ya know. It’s how they make money. Pretty cunning.
    Secondly, why didn’t you sell in on eBay, that way, you get all of the $30….

  • unhappily enough ive owned 4 xbox 360’s and unfortunately im wating on the 5th. WHAT THE HELL. why cant microsoft design and release something reliable ?

  • I’m interested to see if this is the same Australia wide. It is also interesting that this only seems to be an EB Games problem. I work at GAME and as far as I know, we have had no problems with getting 360’s in stock at all, especially before Christmas.

    The thing with the warranties offered by EB Games is that they only kick in once the Microsoft warranty runs out. Which is why they call them ‘extended warranties’. So if someone bought the console back, as faulty, within the first 12 months, then it is Microsoft’s problem and they should be the ones to fix it.

  • It wouldn’t surprise me if we are getting refurbs dumped on us and sold as new.
    I was with a friend 3 months ago when he bought his 360 from EB, there was a huge scratch across the plastic case and suffice to say it now won’t read discs anymore and he has to package it up at his expense and send it back to M$!!

  • This is going to sound like a really immature comment, and it is, but
    Fuck EB!
    It is a terrible store and if no other store has had this problem, I don’t see why they should.

  • EB has a habit of taking warranty replacements, swapping out a new unit, then sending it back to MS a “defective”. My EB did that with mine. I know because the manager said I couldn’t get the free games when swapping out the premium.

  • EB must be having trouble with Nintendo as well.

    Every time I ask them if they have any Wii’s they tell me they’re “out of stock” and “don’t know when they will be getting more in”.

    Oh EB is sad they can’t gouge the public into purchasing an extended warranty from them. Awwww, too bad.

  • What comes around goes around. EB is a horrible company to work for. I have seen great hardworking employees get fired over nothing. I worked for EB as a manager and I resigned. they would never lsiten. I told them to sell the preowns cheaper and give more value , but they dont care. Its greed , and now one of thier ploys to make money is bitting them right in the ass. We as gamers have all the power to control the market. Its time we do that, and never again let any company control us. If the proce isnt right dont do it. They will have no choice but to honor us. Stcik together people. DONT BUY ANYMORE PREOWN GAMES. Its hurting the game companies bigtime, and soon they wont be able to afford to make games.

  • This is the problem of EB Games. They have contracts with their customers (extended warranties) that they are choosing not to honour because it is costing them money. Breach of contract and possibly breach of s52 of the Trade Practices Act.

  • I’ll preface this with, “I HATE EB GAMES”

    I’ve had nothing but bad experiences with them. I bought a used original x-box around like 2003. The first one they gave me wouldn’t even turn on. The second one they gave me had a red ring the instant you plugged it up. EB didn’t even plug that machine up to see if it worked before taking it and, more importantly, selling it. Strike 1.

    I bought a a used gamecube a few months ago. THe video cord was broken out of the box. Luckily my old N64 cable worked. However, once again, EB didn’t even test the system to see if it worked or not before selling it. Strike 2

    Strike 3. I purchased a used 360 game that wouldn’t even load past the logo screens. They didn’t even test the game out and sadly they probably sold that broken disc back to someone else. Strike 3.

    EB is easily the worst place to buy used games or systems. They screw the consumer on a regular basis and they screw game makers on a daily basis. I hate them. I’m glad someone is finally giving them a taste of their own medicine. I hope this drives EB Au to bankruptcy.

  • I purchased an ‘Xbox 360 and extended warranty’ from EB Games about 16 months ago. The box stopped reading games last December and I took it back to EB for replacement. They told me that they “didnt have any in stock” but “should have some within a week”. Week after week rolled by and guess what, no Xbox. I eventually ‘spat it’ last week and offered to pay the extra $130 dollars for an Elite system (which they had in stock). To their credit, they accepted my offer. If you are waiting indefinately for a new system then you may want to consider offering the same.

  • I went into an EB store today to buy Xbox 360 premium and was told that due to; quote”90% failure rate we are not stocking, this will probably not be fixed until March” unquote.

    My take on it is this, EB sell their own extended warranty – MS announce (in good faith) that on July 5th 2007 that; “The company said it will cover machines that experience such failures for up to three years from the date of purchase” see here:

    So EB decides that all those juicy “extended” warranties they sold can now be covered by MS rather than their own insurance company (you don’t really think that EB have a bunch of qualified staff actually fixing the units do you?) They are all covered by an insurance company against failure…..

    End state:- Went into GAME got a good Deal on the Xbox, extra controller, HDMI and a battery charger.

  • Lol i know where they are being stored……
    Australian post warehouse in wethrill park n.s.w. and omg their is thousands of them. So when I saw that i made my mind up on the spot and bought a ps3, made my life a whole lot easer as i couldn’t decide.

  • This blog has gotten some mainstream media attention from the Sydney Morning Herald – the link is below:

    In response to that article, I sent the following to the Sydney Morning Herald (and also thought other users might appreciate this):

    Having just read the article “Faulty Xbox yarn is nixed” from January 30 2008 – I have further information with regards to that story.

    I purchased an Xbox 360 Pro (as mentioned in the article – the ones with the defects) in October 2006, after my Xbox version one died 3 separate times. Whilst wary about purchasing a 360, it was the only console available, and so decided to buy one. At the time of purchase, an EB Games employee asked if I would like an “extended warranty”, which meant, in his words “that if the 360 fails in the next two years, we’ll replace it with a new one”. Naturally my wariness over the reliability of Xbox products encouraged me to do so. This cost me $85, and covered me for two years from purchase (ie, until October 08).

    In the past two weeks, my 360 has been suffering from the “two red light” overheating shutdown. I am not able to play my 360 for more than 5-10 minutes every 6-12 hours, even during the middle of the night when air temperatures are cooler, and not at all during the day. With my MS warranty running out just days before it started (and of course not being covered by the extended 3 year MS warranty due to the fault not being the “Red Ring of Death”), I contacted EB in the belief that they would replace my 360 with a new one.

    The response I got was not impressive: EB Games had chosen to refund ALL customers who had purchased the extended warranty, as they had/have been involved in LEGAL ACTION with MS, and as such were no longer able to uphold their end of the deal by providing customers with a new xbox 360.

    I was told that there still were no Xbox consoles currently in stock, and that there would not be for at least two weeks – whether this was new or reconditioned models was not specified.

    Their “best offer”, as they put it, was to refund me the $85 for the warranty, and offer me a swap on my console for another “seconhand” (read: faulty and repaired) console. I said I would consider my options and get back to them. At this stage I am considering contacting the Office of Consumer and Business Affairs, ACCC and/or legal counsel due to the misrepresentation on the value of the warranty/merchantable quality of the goods, as well as contractual issues surrounding the warranty.

    I would be interested to hear whether an EB Games employee has specifically given a false or misleading statement re: Legal action involving MS.

    As it is, I do not believe I will engage in commerce involving either EB or MS in the future, and will be advising other consumers to avoid the 360 at all costs.

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