FindLaw on the Netflix Settlement

Anita Ramasastry from FindLaw has written an analysis of the Netflix Class Action Lawsuit:

The problem, though, was that Netflix did not disclose the throttling to consumers up front - and thus arguably misled them as to the service they were purchasing, breaching its agreement with them, as stated in its Terms and Conditions. For this reason, the plaintiff class had a valid claim.

Nevertheless, I will argue that this suit -- which led to a whopping payment to attorneys and limited benefits to DVD renters -- may not have been the best way to protect consumer interests. The lawyers may get as much as $2.5 million in fees. And Netflix subscribers will get an upgrade on their current subscriptions for one month.

The conclusion?

One thing is for sure: The suit didn't put a stop to throttling. Netflix is still doing it - and so is Blockbuster, which now also offers a rent by mail service for DVDs. The difference is that now, both are doing it openly.

via Netflix Fan Blog

Comments

[Rusty Ramrod]

"The conclusion?
One thing is for sure: The suit didn't put a stop to throttling. Netflix is still doing it - and so is Blockbuster, which now also offers a rent by mail service for DVDs. The difference is that now, both are doing it openly."

Personally I could less if I get anything as long as NF is punished. In addition to the attorney fees, a nice fine, say $17.99 for each of their "claimed" customers would be appropriate to convey to these companies that it is *not* OK to deceive and lie to their customers.

I mean let's face it, which is worse, to lie and deny, then be found out, or to just tell the truth in the first place?

Both ways the customer is pissed, but by being honest up front at least they don’t have a reason to mistrust. The stigma of that loss of creditability will stick to NF for a long time to come.

[Dedman]

How openly are they doing so? Let us suppose that I mail a DVD to Netflix on Monday and they receive it on Tuesday. If they are throttling me, then they may not alert me to their receipt or send out a DVD until Wednesday, perhaps Thursday. Let us assume they send it out on Thursday. Now, despite the fact that they have received it on Tuesday (and presumably returned it to their inventory and probably sent it out to the next subscriber), the DVD is still reflected as being "at home" in my queue. How can it be "at home" if it is already on its way to the next subscriber (or perhaps in the hands of the next subscriber) if it is still at home?

To be truly honest and open about throttling, Netflix should alert me that they received the DVD on Thursday via one of their receipt emails and list that spot on my queue as "on hold" or "throttled" until Thursday, shouldn't they? Otherwise, I am under the impression that they have not received the DVD or that the post office may be slow.

[NetflixShill]

Their lies about when they receive our DVDs are the most annoying. You can verify that they're lying by attaching tracking labels to returns and/or putting 2-3 movies in one envelope. They will pretend that the discs somehow arrive on different days from the same envelope, or that the USPS delivered it on one day, but it somehow took 1-2 days to check it back in. Their intent is transparent. They need to just start being honest about when DVDs are received and list your queue as "on hold" or "throttled" until a later date. And drop ALL of the "unlimited" claims.

[Handtek2k]

As usual, the hysterical whining about so-called throttling continues. My main comment about the professor's analysis is "duh"? Did he think the class action lawyers who brought this suit did it because they wanted to achieve some tremendous win for the consumer here? Lawyers these days comb the unilateral service agreements of tech companies looking for even the slightest lack of clarity, omission or inconsistency to base a class action lawsuit on. They pocket big fees, even if they just settle, because the plaintiff class is so huge, while securing BS benefits for the plaintiff class.

[corey3rd]

If Netflix wanted to "throttle" without looking like it, they should have people marked as "major users" receive a few of their titles from cross country depots. A guy in Georgia would get his titles from Hawaii - thus buying 4 days worth of shipping into the cycle. Someone in California gets their DVDs shipped from Rhode Island.

[Dedman]

Actually, Corey, that would not benefit Netflix to do it that way, because the DVDs would be in transit longer, but Netflix would not be able to send it to another customer while placing your queue on hold. Netflix benefits with throttling because they are able to put the queue of the major user on hold and send those DVDs to people who may or may not be major users while the major user waits.

I'm not sure that it is "hysterical whining" to say that Netflix should be honest about throttling. Let them throttle. Who cares? Most major users are such because they enjoy the service. However, disclosure should be full. If the Netflix facility in Houston receives my DVD on a Tuesday, let my queue so reflect. If Netflix does not wish to send me the next DVD on my queue until Thursday, let the queue so reflect with some designation that the queue is being throttled. However, Netflix should not tell me that it received my DVD on Thursday when it in fact received it on Tuesday (and may well have sent it to another customer on Tuesday or Wednesday). Basically, my queue should not tell me a DVD is "at home" when it has already been receive by Netflix and presumably sent to the next customer.

Of course, were Netflix to start doing this, the throttling would be far more apparent, even to those who may not check their queues each day to see if a DVD was received. They may have met their minimum obligation to disclose the concept of throttling in the fine print, but the queue should not lie, not should it?

[Rusty Ramrod]

"If Netflix wanted to "throttle" without looking like it, ......"

Whatcha mean "if", they already do that all the time.

[NetflixShill]

"Whatcha mean "if", they already do that all the time."

Yes, but he said "without looking like it." Their current ploys are transparently obvious. Sending movies from far away is obvious. What are the odds that they don't have it locally? Sending movies to Michigan from Hawaii looks like throttling, unless they only do it once a year. Movies should be sent locally, as much as possible, to minimize loss and damage. They should be honest about limiting you.

[Surferserge]

A March 1st, Email sent to pr@netflix.com (since you can't actually email Netflix customer service) on throttling. Reality--this company lies and treats loyal customers badly. Great business model. Please note that the customer service agent attempted to tell me that Netflix doesn't throttle, and I just read back the quote from her CEO to the Associated Press.

Dear Netflix:

Since your customer service emails don't work, I am forced to send this to the PR email.

1. You lied to me and said two recent films were lost (Little Big Man and 20,000 Leagues Under the Sea) in order to explain delays in sending them. When I called to complain these films were immediately "found" and I received two films immediately-the next day.

2. Now I am being kept from watching films: Walk the Line and Pride and Prejudice which do not even appear in my "new releases" screen. Apparently these films have long waits and I may never be able to see them???? Friends have no wait for these films.

3. You are discriminating against me for frequent movie watching. There is no wait at Blockbuster or Hollywood video these companies do not discriminate against loyal customers.

4. I don't know of any other company in America that discriminates against customers for their loyalty. You are now the member of an elite club. Congratulations

5. I am sending this email to all my netflix friends and posting it on hackingnetflix.com

[BobGray]

Actually Surferserge, I know of another company that discriminates against its long-time and loyal customers - Earthlink, my ex-ISP. While service plan costs dropped several times since I joined several years prior, they refused to give me the lower rate, even though I had long since completed my initial service contract. After much arguing with Customer Service they agreed to give me the current rate, but only for one year at a time...and ever year, I HAD to commit to their 12 month service agreement. I dumped them.

As far as Netflix goes, I joined only this past summer. While the mentioning of this throttling policy was already in place....in the fine print I suspect...I was completely unaware of it. All I saw was the "UNLIMITED" stuff.

I suspected I was being throttled when sometimes it would take 3 working days for them to "receive" discs. My distribution center is about 20 minutes from where I mail them and most of the time they will receive the discs the following morning when I mail them the AFTERNOON before. Other times they have shown up in my account as "received" but it takes two days for the next titles in the queue to be sent. Clearly this is throttling. At the time, I knew nothing about this practice and wrote to Customer Service about the delays. In their responses they NEVER mentioned the throttling practice and either blamed it on the mail or clamied that the delays were necessary because the title had to be shipped from facilities across the country. Even if that is necessary, why should it take TWO days to simply pick the title they are going to send? With the additional ship time, that's a 4x increase in normal 1 day turnaround time.

I totally agree with those who say they should be honest about it and simply mark in your queue that you are being throttled. Personally it only happens to me once a month or so, but it's not right that they continue to hide the practice or blame the poor USPS.

[tachyon.chaser]

I recently had 3 returns out of 25 to my local DC (normally overnight delivery) delayed by more than the 6 days NF wants you to wait to report returns as "lost". They were "received" shortly after I reported them missing. What are the chances of that? Well, I can tell you...

NF seems to report shipping dates accurately. This lets the cat out of the bag for we analytic types. All shipments from my local DC are next day or, with very few exceptions, 2 days and never longer. You can compute mathematically the likelihood whether the Postal Service or NF is causing the excessive delays.

If you assume that the PO treats mail the same in each direction, then the chances that you would receive 25 shipments with no delay compared to having 3 out of the 25 return shipments delayed by an excessive amount are less than one in a billion. And this assuming that the PO would delay 1 out of every 100 mailings exessively...and the reality is that the PO is much more reliable than that.

Of course, the handling is slightly different in the from/to directions since NF uses presorting when mailing to you and there is no presort for your return shipment, but this pretty much makes no difference.

Simply put, it's effectively impossible for this kind of performance to be due to postal delays. The only remaining cause would be due to the differences in the way NF handles the reporting of shipping and receiving.

There is more that can be gleaned from such analysis, but I won't bore you with the details. You get the gist.

It's interesting that NF doesn't even mention the possibility that delays could occur at the DC!

Food for thought, fuel for the fire.

[SomeoneatNFneedssomeballs]

I just got off the phone with customer service and the guy assured me that NetFlix does not manipulate the received date on their DVDs. His reasoning was that they don't have the space for it. When I tried to inform him that it took no space to do so, just a few keystrokes in programming, he said it must be due to "oscillations of the postal service". I didn't want to attack the poor uninformed customer service phone jockey so I let it go at that. But he did outright ceny that this type of throttling was part of NetFlix policy. I'm sure he has no idea what the policy actually is. And how is the unlimited portion of the agreement not broken if NF puts your account on hold rather than just adjusting your queue? Has any service ever thought about renting per disc so that they have a set profit margin for each rental? That would eliminate any need for throttling, wouldn't it? And the customers would be happy because everything would be disclosed up front. Has this been discussed before?