Blockbuster Settles "No More Late Fees" Investigation for $630,000; Refunds Customers

Jason tipped me off to the story in the Oregon Bend, Blockbuster busted, must refund "no late fees". The story states that Oregon Attorney General Hardy Myers was the lead on the negotiations, which resulted in a $630,000 settlement. The proceeds will be used to reimburse the states for the cost of the investigation.

Here's the press release from New York Attorney General Eliot Spitzer, which stated:

Blockbuster, Inc. settled investigations commenced by 47 states and the District of Columbia and agreed to provide clear and conspicuous disclosures about its "No Late Fee" program and to issue refunds to thousands of consumers who have paid "re-stocking fees" or were charged the full cost of a video.

The Attorneys General alleged that the advertising campaign launched in late December 2004 was misleading because it failed to clearly disclose that, seven days after a movie or game’s return due date, the consumer would be charged its selling price if the item were not yet returned. Thereafter, if a consumer returned the rental, he/she would be credited for the selling price, but would be charged a "restocking fee" of $1.25 or more.

The Attorneys General also alleged there was insufficient disclosure that not all Blockbuster franchise stores were participating, leaving customers of those stores wrongly believing that they, too, would not have to pay late fees.

The terms of the settlement include:

Make the terms of the "No More Late Fees" program clear and disclose any charges.

Disclose that not all Blockbuster stores are participating in the program.

Provide notices throughout stores that includes the terms and conditions of the promotion.

Remove the existing "No More Late Fees" signage throughout the store, and request that franchises do the same.

Link to the terms and conditions from the main page of their Web site.

Notify customers in writing when a rental has been converted into a sale, and that they need produce the credit card that opened the account to receive a credit.

Provide a refund or credit to any customer that failed to return a movie, if they do so by April 28, 2005.

Additional information from the press release on obtaining a refund or credit:

Customers who believe they are entitled to a refund may obtain complaint forms at Blockbuster stores or by writing to: Blockbuster at 1201 Elm Street, Suite 2100, Dallas, TX 75270, Attention: Mr. Steve Krumholz, Sr. Vice President. New York consumers also can call the Attorney General’s consumer help line at (800) 771-7755 for a copy of a complaint form.

Eligible customers are only those who rented a product after December 31, 2004 and prior to March 29, 2005. Customers must allege the details of the transaction and a lack of understanding of the "No Late Fee" program. Restitution only applies to fees on items in the initial rental transaction after December 31, 2004. Requests must be made by April 28, 2005, or if after that, within 7 days of first discovering that late fees have been charged.

The Blockbuster.com Web site now includes "The End of Late Fee Terms" which is a link to the following text:

Membership rules apply for rentals. Rentals are due back at the date and time stated on the transaction receipt. There is no additional rental charge if a member keeps a rental item up to 7 days beyond the pre-paid rental period. After 7 days beyond the due date, Blockbuster will automatically convert the rental to a purchase on the 8th day and will charge the member the selling price for the item in effect at the time of the rental, minus the rental fee paid. Member then has 30 days to return the product and receive a credit for the selling price charged, less a $1.25 restocking fee. These terms available at participating stores only. Franchisee restocking fees may vary. See store or blockbuster.com for complete terms and conditions.

Comments

[CB]

I'm so glad this happened to Blockbuster I just wish it had been a lot more money. I am so sick of them

[Tvindy]

lol. They certainly had it coming.

[rob emmerich]

I rented a game from them yesterday (with my free online coupon) and the receipt said: Due Apr 6; Own it Apr 13 for only $43. So at least it's on the receipt - though I don't know how many people renting "God of War" are going to be looking at their receipts ;-)
This entire marketing scheme was bad from the start, they just should have called it "Blockbuster Bonus Week" and left it at that.

[trey]

"Blockbuster forced to be somewhat fair, against thier own wishes" is what this article should be titled. hahaha I too am sooooooo sick of this company. Good thing their is Netflix Yea!

[CashForFlow]

rob emmerich,

"This entire marketing scheme was bad from the start, they just should have called it "Blockbuster Bonus Week" and left it at that."

That is my view exactly.

[giles]

Ironically this whole deal gives even more PR and benefit to Blockbusters Online service.

[CashForFlow]

This whole AG settlement thing is BS. What about Netflix's deliberate throttling in the face of "rent all you want"

The real guilty party here is Netflix, not Blockbuster. It's like going after Martha Stewart instead of Worldcom and Enron.

[Tim]

I am and assistant store manager for Blockbuster Inc. I feel that in light of recent events things tend to look on the down side for Blockbuster. Chairman and CEO Antiaco stated in the "Home Media Mag" that he would be cuting losses above the store level, meaning that District managers and up are possible going to loose there jobs becuase of the end of late fee's. Its safe to say that I am not the CEO but the Hollywood takeover and end of late fees may just be the end of Blockbuster!!!!

[tom]

tim,
if you had worked for a blockbuster store you would knoe that there are actually no such titles.
nice try.

[Mark Sicignano]

Interesting take on this:

http://www.jslogan.com/index.php?title=i_ll_forever_have_to_read_the_fine_print&more=1&c=1&tb=1&pb=1

[b]

did you retarded people honestly think you could keep your movie forever. Then blockbuster has made so much money on this their rental transactions are threw the roof they have almost made up the difference in the no late fees threw this

[LA]

Blockbuster is the biggest Fraud. People want entertainent, and Blockbuster makes an attemt to lure people in with the lies of NO MORE LATE FEES. What does that mean? To the public it means NO MORE LATE FEES to Blockbuster it means we have fooled our customers and now we can make even more money when they relax and decide to bring the movie back 10 days later. Suprise you notice a huge fee had just been removed from your bank, and then a restocking fee is charged. Blockbuster your so good at ripping the public off you really ought to try your hand in politics.

restockign fees are totally common in term rental. it is a regular practice for 50 years.

stop whining.

[LA]

Could you at least use proper grammar and do a spell check before you post your moronic ideas all over the web. Know what you’re talking about before you make such an ignorant comment. This new program that Blockbuster has launched is the best way to make more money. Most people wouldn’t even notice that their accounts had been charged. Unless you actually go into the store and go through a quite lengthy procedure you will only be given store credit and you won’t get your money back. It’s the oldest trick in the book, similar to rebates. Why do rebates when you can just give them the discount? Because 50% of rebates are never cashed in. If you never get your card reimbursed and you never use your credit, Blockbuster is really making out. Think about that.