Rumor: Blockbuster Dropping Late Fees?

Update: CNN Money confirmed the rumor.  There is one catch:

But customers will be given a one-week grace period after that to return the product. After that grace period ends, the chain will automatically sell them the product, less the rental fee. If the customers don't want to purchase the movie or game, they can return the product within 30 days for a credit, less a restocking fee.

This was in my e-mail when I got back from holiday shopping. If it's true, then Blockbuster has realized how much people have grown to hate them for the atrocious late fees they've levied over the years.

Hello! I am an employee at Blockbuster Video in California and was told today that Blockbuster Video is going to be getting rid of its extended viewing fees altogether! No more late fees... PERIOD! From what I understand, this was tested up north and down in San Diego and it did very well. Stores got more customers, etc. So Blockbuster is going to roll it out.

This is completely different from the Movie Pass program that Blockbuster currently has, which allow customers to rent and exchange up to 2 or 3 movies at one time without any due dates or late fees as many times as they want.

I am talking about regular rentals that do not apply to the Movie Pass. This by far, has been the most aggressive thing I have seen Blockbuster Video do in my entire employment history. I don't know the details: how, when, what, etc., but I do know one thing, LATE FEES AT BLOCKBUSTER VIDEO WILL SOON BE A THING OF THE PAST!!

Excellent PR move. I think it will help get people back into Blockbuster stores. Will they offer an "amnesty" program?

Can anyone confirm this? I'll contact Blockbuster PR and see what they have to say... (Heheh. I can see the look on their faces when they get an e-mail from "HackingNetflix.com").

Thanks to Orbitcast for the update.

Comments

[rw]

I heard the same thing in passing last week from a Blockbuster employee that I know. The new program seems to be in the works for Seattle Blockbuster stores. I neglected to learn the mechanics of the program, though I would be interested to know how blockbuster would encourage its customers to return movies in a reasonable time and maintain stocks of new releases.

[Aron]

This is probably an adjustment of them to be the same per day price as a rental. Semantically, I think you have to get rid of a "due date" to get rid of "late fees", but having a rental cost the same per day is almost effectively the same thing. That's not really *that* ambitious. It is a good idea - late fees are understandable, but gouging charges are not.

They have also tested full clemency on existing customer late fees in a couple of cities. Though I believe that used to require committment to the movie pass. Not sure I'd be for that if I were them but if they can retool the late fee balances to be equal to the new "late fee" price that would be smart (or say, to some respect, we'll meet you half way).

[Aron]

Congrats to your spy-network..

http://biz.yahoo.com/prnews/041214/nytu067_1.html

Holy smokes they did go with something crazy!

[Jeff]

At my blockbuster in Colorado, they have 99 cent rentals per day for certain movies. I assume this is the same thing, except eventually it will be all movies? I thought blockbuster was just doing it to compete with a new McDonalds program in Denver of renting dollar movies from an automated machine. Both may become wide spread.

[Jonathan Arnold]

I agree with Gizmodo - it might be alot of things, but "having no late fee" isn't one of them. You get a week's grace, and then they assume you are buying it and charge your credit card. Yech!

http://www.gizmodo.com/gadgets/home-entertainment/blockbuster-doesnt-drop-late-fees-027599.php

[Carl Cravens]

CNN has an article. Even if you miss the end of the week grace period, you can still return the movie for a refund, minus a "restocking fee."

http://money.cnn.com/2004/12/14/news/midcaps/blockbuster_latefees/index.htm?cnn=yes

(I've been wondering... what's the difference between a 3-day rental with a 7-day grace period, and a 10-day rental? BB expects more business with this, but will they need a larger inventory to account for movies staying in circulation longer?)

[Kevin]

Well that is cool. One week to view the movie and an ADDITIONAL week grace period.. that is TWO weeks!! If people can't watch a movie in two weeks then maybe they shouldn't rent at all and deserved to be charged (then again they do get credited on their account within 30 days). Two weeks in a VERY LONG time to have a movie. Even 10 days! This will be cool....

[Aron]

One of the most telling statements from the CEO suggesting that this wasn't well thought out was that "customer's tend to consider this a favor from us to them and return the video within 1 or 2 days".

Perhaps during the limited trial periods they tested.. let 'em warm up and take it for granted. Soon the math will be 10-day rental. Oh, that's due on Tues? Yeah.. the FOLLOWING Tues. MUHAHAHAHA.

I can honestly say I never thought of such a variation. The closest thing I had, was:

You buy a movie 'slot' from Blockbuster for 20$ and put any movie in the store in it. Then you can replace that movie with any rental in the future for the standard rental fee. You can do this as often as you care to, or keep a movie forever.

There's a lot of cool flexibility in such a system including no due dates, and no late fees. Generally, customers will replace their existing movie with a more valuable one. The rental fee is hoped to be sufficient to cover the delta on average. I'm not sure which approach loses more money for them, but if they really wanted to get rid of due dates, hassle, and complexity...

[Becky]

Clark Howard (see clarkhoward dot com) mentioned this deal on his radio talk show today. He effusively praised Blockbuster for making this move, saying that it shows Blockbuster is flexible, adaptable, and concerned for its customers.

[Ryan]

The formula that Aron mentioned would be something of a throwback. When my family opened our first video rental account way back in the early 1980s, it was set up where you paid the purchase price of one movie (which was, admittedly, a lot more than $20 at the time) and could rent a movie at a time, and then you were allowed to keep a movie whenever you wanted to end your rental agreement.

Glad it's not something like that, personally.

[Aron]

That's very interesting Ryan, I wasn't aware such a thing had ever actually been tried. In the mid-80s before Blockbuster I recall the going price for rental was about 1$/day. It's my understanding that VHS was in the 60$ - 80$ range for new releases.

What is it more specifically you don't like about that plan (as an optional alternative)?

[Manda]

Call me Pollyanna but is it really that difficult to return DVDs on time? I don't understand why people love to gripe so much about Blockbuster's fees when you have no one but yourself to blame for getting it there late.

[LonK]

The Motley Fool, Marko Djuranovic thinks this is actually a plus for Netflix. I agree.

http://www.fool.com/News/mft/2004/mft04121519.htm

[Kilogr]

I've been reading many comments about this no late fee thing and how people think it's just some kind of gimmick or hassle. If you really think about it it's going to make going to rent a movie a lot more hassle-free. I hate going in there and having to argue about bringing a movie back 15 mins before noon. I know that if you don't bring it back after a week with this new plan you'll get charged, but bring it back within a month and you'll get a refund minus a like dollar fee. And I'm sure that Blockbuster has been testing this for over a year now with great results. I look forward to going to Blockbuster without having to worry about repaying the rental fee for a few minutes overdue.

[Aron]

I have a hard time seeing it as anything other then a positive move for Blockbuster customers. You could debate whether or not its as elegant or forgiving as Netflix's no Late Fees system, but that would be a different debate.

[Jill]

Here's my understanding of the new Blockbuster
"No Late fee policy"

You can rent as many movies as you want from Blockbuster for around $5.00. You have
to give them a valid credit card before renting them. You can keep them for 9 days with
no extra charge.

On the 10th day your credit card will be billed for the movie at full retail price (this could
be around $27). If you rented 3 movies your credit card could be billed for $81.

You then have 30 days from the rental date to return the movies for a full refund except a
$1.50 restocking fee charge for each movie.

You then receive a STORE REFUND for the remaining $76.50.

I'm guessing that in the 30 days they will not contact you to remind you that the movies
are due back and they are hoping you end up in a "forced sell" at a higher than normal
purchase price.

Are you going to be happy? I doubt it!

If you do this twice you now owe your credit card company $162 and you have a $153
credit with Blockbuster that has to be spend in the store.

[Brandon]

Being a recent Blockbuster Video Employee, actually they charge your credit card on the 8th day....also you are not forced to sign up for an account with a credit card, you can use car registration or a current utility bill to show proof of address...then when they go to charge you it just sits on your account, and never gets billed to your actuall credit card, also they remind you up the ass, in fact alot of customers have been complaining with all the notices and automated calls that keep reminding them, even after they have returned the product. Also if you do end up with credit on your account to get it back, you have to bring in the same credit card that was charged for the purchase and then the employee will refund it to you card....hope this all helps...but screw blockbuster they fired me