Blockbuster Video has settled with 48 attorneys general over charges that it misled consumers with it its No Late Fees campaign. Despite the settlement, the hype and marketing around the program has brought added business to Blockbuster.
As part of the settlement, the company will pay $630,000 to the states and refund consumers who were billed for a video or paid a “restocking” fee under the campaign. Blockbuster has also agreed to change its future advertising to include a clear and conspicuous explanation of the charges consumers face.
“People rent movies to be entertained, not to be misled about charges and fees,” North Carolina Attorney General Roy Cooper said last month when the settlement was reached. “Blockbuster’s catchy slogan may have brought in business but it turned out to have a surprise ending, as some customers found out.”
The Attorneys General alleged that Blockbuster did not sufficiently disclose that the program was offered only at participating stores, causing some customers of non-participating stores to think they wouldn’t be charged late fees.
Blockbuster said that it is not changing its program but is adding additional communications pieces to support the program. It said it believes that most of its members understand the program.
“More people are renting from us more often, so customers clearly like No Late Fees,” said Nick Shepherd, president of US store operations, in a statement. “They like the flexibility, the convenience and the value that No Late Fees offers.”
The AGs said Blockbuster did not make it clear that customers would have to pay the entire cost of the item rented if it was late. A restocking fee was charged if customers then tried to return the items, Cooper’s office said in a statement.
Under the No Late Fees program, Blockbuster eliminated late fees but kept due dates. Customers have one extra week to keep the item at no additional costs, but once the item is kept past the end of the seventh day after the due date, the rental turns to a sale. If later, customers decide they don’t want to own the item, they can return it within 30 days and are charged a $1.25 restocking fee. Blockbuster began heavily promoting the new offering last December with a Jan. 1 launch date.
“Consumers deserve straight talk from businesses, not clever advertisements that gloss over important details like extra fees,” Cooper said in a statement.
A New Jersey suit against Blockbuster over the late fee program is still pending.