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MS stops giving Californians $400 each for computers

Small minority of thousands queues for hours as the stable door closes

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Microsoft's $400 gift to Californian electronics buyers is no more - the company pulled the plugs on the deal last night. Earlier this week the San Jose Mercury revealed that the $400 rebate offered in exchange for signing up for MSN for three years was effectively a gift, but now it isn't, and MSN is going to have to rethink its promotional activities in California. On the Mercury revelation Microsoft spokesman Tom Pilla expressed confidence that the deal was so great users wouldn't cancel anyway. Due to a peculiarity of local law, if a buyer cancelled before the MSN commitment was up, they wouldn't have to give the money back, so the deal was you could just go to Best Buy, get the rebate, then cancel immediately. Today, however, Pilla is telling the Los Angeles Times: "Unfortunately, a few people are abusing a programme designed to help people access the Internet." A few, just a very few. The Times reports that "thousands of consumers across California thronged to Best Buy and other retailers to take advantage of the slip-up. At the Best Buy in West Los Angeles, the result was four-hour waits with hundreds of people in lines snaking through several aisles." Wonder what MSN's installed base graphs for California are going to look like this month? Microsoft says it will honour the deals with people who already signed up and wish to cancel, but the Times has been doing a little digging, and it seems possible that this story may be about to get more complicated. The argument that the return of the rebate is unenforceable in California is based on a section of the State Financial Code that says you can't make a consumer buy something as a condition of getting a loan. But the paper checked with Julie Stewart, assistant commissioner of the California Department of Corporations, and with state officials. "It is not a loan - it's a rebate programme," Stewart said, and the other official concur. Other service providers running rebate deals in California enforce the return of the money on cancellation, and it would appear MSN could do so as well. Except for one thing. You'll recall that a feature of the programme in California was that the sign-up form there was different from the sign-up in the rest of the US. In California MSN didn't require cancellers to give the money back, so even though the law seems to say it could, it can't. But it could restart the programme with a new form. Somebody in the MSN legal department, we reckon, must currently be a very unhappy bunny. ®

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