Kickbacks Alleged in Textbook Deals

DETROIT (CN) - A federal class action claims the nation's biggest mail-order textbook provider overcharges students for books, and pays secret kickbacks to schools that push its services. The class claims that MBS Direct, a unit of MBS Textbook Exchange, has exclusive contracts with more than 600 schools, which force students and parents to pay more for required texts, some of which are available much cheaper, even through MBS.

MBS sales agents "solicit exclusive relationships with universities and parochial or non-public secondary schools across the country in which the schools agree to direct their students to purchase textbooks from MBS, at artificially inflated prices, in exchange for receiving a kickback from MBS," according to the complaint.

Schools provide MBS with a list of books for each class it offers, and tell students to go to the MBS Web site, type in their classes, and buy the books, according to the complaint.

"If a school declines to receive a kickback, the books are sold at a lower price to that school's students, rather than the higher price charged at the schools receiving kickbacks," the class claims. It adds that students and parents are not made aware of the price discrepancy.

The class claims that to prevent students from buying textbooks elsewhere, MBS and its school business partners will not reveal the International Standard Book Numbers for its textbooks. Students cannot be sure they are buying the correct edition without the ISBN numbers.

MBS also overcharges for used textbooks, and "generally does not offer enough used textbooks for the demand, thus forcing most buyers to purchase a new book at the higher price," according to the complaint.

Nor does MBS fairly reimburse students from whom it buys used texts, though MBS falsely claims to offer the lowest prices on textbooks and offers "top dollar" for buybacks, the class claims.

MBS runs another Web site where students can get books at a much cheaper price, with free shipping on orders over $25, which MBS - and the schools receiving kickbacks - do not reveal to students, according to the complaint.

If a school drops its contract with MBS, MBS will direct students to the alternate Web site, to keep them as customers, the class claims.

Despite its privacy policy, MBS provides the schools with listings of "which students purchased which textbooks at which prices," which it touts to schools in its promotional materials, the class says.

Some Michigan schools that have contracts with MBS include Central Michigan University, Eastern Michigan University, the University of Michigan, University Liggett School, Cranbrook Kingswood Schools and Detroit Country Day, amongst others, according to the complaint.

The class demands restitution, disgorgement and damages for violations of the Michigan Consumer Protection Act, fraudulent misrepresentation and unjust enrichment.

Lead counsel is E. Powell Miller of Rochester, Mich.

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