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Microsoft hit with second Xbox lawsuit

Customers say the device scratches and ruins video game discs

July 20, 2007 12:00 PM ET

Computerworld - A second lawsuit was filed this week against Microsoft Corp. by customers complaining about the Xbox 360 console scratching and ruining video game discs.

The suit, filed Monday with a Los Angeles federal court, followed a similar lawsuit submitted to a South Florida court the week before.

In the California filing, state residents Christine Moskowitz and David Wood claim that "during regular use, the Xbox 360 scratches the surface of the game discs, often to the point that they will no longer play in the console." When contacted, Microsoft refused to refund the price of the games or replace the discs, the lawsuit said. Microsoft's policy is to offer replacements only for its own titles, and then for a $20 swap-out charge.

Moskowitz and Wood are seeking class-action status for their suit and refunds for the cost of the games and/or the Xbox 360. Damages were set at $5 million minimum.

According to the lawsuit, the scratching problem isn't associated with the "red ring of death" issue that Microsoft said prompted it to extend the Xbox 360's warranty. Earlier this month, Microsoft announced a $1 billion-plus charge against earnings to pay for the warranty extension and repairs to all consoles that fail after displaying three flashing red lights to indicate a general hardware problem. In the earnings statement released yesterday, Microsoft pegged the charge at $1.06 billion.

Reports of Xbox 360s scratching discs aren't new. In April, a popular Dutch TV program (YouTube video) claimed that one in nine Xbox 360s it tested scratched game discs within a matter of hours. An independent hardware consultant, the program said, pointed to defects in the DVD drive, which is made by Toshiba Samsung Storage Technology Korea Corp., as the likely cause.

The Moskowitz and Wood lawsuit cited the Dutch TV report to bolster its call for a class action.

In a follow-up to the Dutch report, Meglena Kuneva, the European Union commissioner who heads that government's consumer affairs agency, said on June 1 that she had written Microsoft for an explanation about the problem, and asked the company to detail what it is doing to address the issue. In a radio interview that day, Kuneva said she had given Microsoft a week to reply, and confirmed that she lacked the power to order an Xbox 360 recall in the EU. "[But] I would be more than happy to act, if I have a legal ground," she said.

Microsoft did not comment today, but when asked about the Florida filing last week, spokesman Jack Evans said: "Out of the millions of Xbox consoles in use, Microsoft has not received any widespread reports of Xbox 360s scratching discs."

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