Blockbuster Reaches Settlement on Campaign

http://abcnews.go.com/Business/wireStory?id=623371&page=2

PORTLAND, Ore. Mar 29, 2005 — Blockbuster Inc. has agreed to pay about $630,000 to settle claims by 47 states and the District of Columbia that the nation's biggest movie rental chain deceived consumers with its "No Late Fees" campaign, the Oregon attorney general said Tuesday.

The agreement, disclosed by the office of Oregon Attorney General Hardy Myers, also requires Dallas-based Blockbuster to make refunds to consumers who claim the campaign misled them into thinking they could keep the video or DVD for as long as they liked.

Many consumers were angry to discover that overdue game and film rentals were automatically converted to a sale on the eighth day after the due date. If they then tried to return it, they were charged a $1.25 restocking fee.

According to the agreement, Blockbuster will have to make a refund to consumers who were either charged the restocking fee, or else paid the full price of the movie they rented.

The Blockbuster payment of $630,000 is to reimburse states for their legal costs. The cost of the refunds would be in addition to that.

As part of the settlement, Blockbuster will also have to "dramatically alter" the way it advertises its no late fees policy, according to a prepared statement by Pennsylvania Attorney General Tom Corbett.

Blockbuster spokeswoman Karen Raskopf said that the "no late fees" program will continue at Blockbuster, but that the company has agreed to add signage in its stores to better explain the fine print of the program.

"We think our original communications were very clear but we're happy to do whatever we can to add additional communication to better inform our customers," she said.

The company has already added the signs to most of its stores, she said, as well as created a No Late Fee information center, where customers can read up on the program. She added that 96 percent of Blockbuster's customers return the movies within the seven day grace period. "Less than four percent of our customers are going to auto-purchase program

Blockbuster launched the no late fees program at its 4,600 U.S. stores on Jan. 1, in the wake of online subscriber Netflix Inc.'s success. Netflix allows consumers to rent up to three DVDs per month for a flat monthly fee of $17.99. They can keep the movies for as long as they want but can only get a new one once they return the ones they have already viewed.

The states who are not included in the settlement are New Jersey, which has a pending separate suit, and Vermont and New Hampshire.

In trading Tuesday afternoon, Blockbuster shares fell 10 cents, or 1.1 percent, to $8.82 on the New York Stock Exchange. The stock has traded in a 52-week range of $6.50 to $17.87.

AP Business Writer David Koenig in Dallas contributed to this report.

On the Net:

http://www.blockbuster.com

I didn't think the policy was misleading. How hard would it be to ASK the person in the store to clarify? I mean, would you just blindly do buisness with a company when they change their policy and not think to ask one simple question?

And who sues for a buck twenty-five?

Originally posted by TheDoyler23

I didn't think the policy was misleading. How hard would it be to ASK the person in the store to clarify? I mean, would you just blindly do buisness with a company when they change their policy and not think to ask one simple question?

And who sues for a buck twenty-five?

You are assuming that the general public is a lot smarter then they really are. Why do you think advertising works so well? I asked them to explain it to me just like you, but honestly you should not have to do that with a company as big as blockbuster. They knew what they were doing, trying to screw the American public. IMO

The restocking fee is only $1.25. That is more than reasonable for a late movie.

How can anybody possibly complain about false advertising? OBVIOUSLY you need to return the movie at some point. If you never bring the DVD back you aren't "renting" it anymore

Originally posted by Beaudry

The restocking fee is only $1.25. That is more than reasonable for a late movie.

How can anybody possibly complain about false advertising? OBVIOUSLY you need to return the movie at some point. If you never bring the DVD back you aren't "renting" it anymore

People are morons. Some morons have money and hire lawyers. Inheritance is a b_tch.

Originally posted by Beaudry

The restocking fee is only $1.25. That is more than reasonable for a late movie.

How can anybody possibly complain about false advertising? OBVIOUSLY you need to return the movie at some point. If you never bring the DVD back you aren't "renting" it anymore

Hmmmm...been a long time since I rented a movie. I usually just do pay-per-view if I want to see something....

I took this:

Many consumers were angry to discover that overdue game and film rentals were automatically converted to a sale on the eighth day after the due date. If they then tried to return it, they were charged a $1.25 restocking fee.

...to mean Blockbuster "sold" the movie to you when you were late...let's say for $5. Now, you bring it back and they say "You own it...it's yours". To which you reply, I don't want it and when you attempt to return it they are keeping $1.25 of your $5 for restocking. Maybe I'm wrong...

...even though I never rent...I'm smart enough to figure out that there is a catch when they say "No More Late Fees". When I heard that ad I said that's bullcrap...just didn't know what the catch was???

I mean you have to assume that there is a catch to a statement like "no late fees." Bottom line, Blockbuster is on its way out because of companies like Netflix. They are trying anything right now to get back their edge. I love seeing a company like Blockbuster get screwed, because they have been doing it to consumers for so many years. There is no way you can say that there has not been a time where you have gone to the counter and they say that something you rented 3 months ago was late. What are you supposed to do? You end up paying the late fee because you can not remember back that far as to what really happened. Peace Blockbuster....there is nothing you can do about your inevitable downfall.

Hey, remember that woman who won like 5mm for burning herself with McDonalds cofee b/c she didn't know it was hot. This is peanuts compared to that IMHO. It is just SAD

Originally posted by Bazooka Tooth

I mean you have to assume that there is a catch to a statement like "no late fees." Bottom line, Blockbuster is on its way out because of companies like Netflix. They are trying anything right now to get back their edge. I love seeing a company like Blockbuster get screwed, because they have been doing it to consumers for so many years. There is no way you can say that there has not been a time where you have gone to the counter and they say that something you rented 3 months ago was late. What are you supposed to do? You end up paying the late fee because you can not remember back that far as to what really happened. Peace Blockbuster....there is nothing you can do about your inevitable downfall.

We've had them try that with us a few times. We haven't paid. We refuse to pay for their incompetence. If they don't want our business we'll stop renting their videos. They haven't pushed it.

It was also Blockbuster that came in to every neighborhood right next to the mom 'n pop video store just to drive them out of business.

Originally posted by Beaudry

The restocking fee is only $1.25. That is more than reasonable for a late movie.

But, it isn't reasonable when the store has spent millions of dollars claiming that the cost for a late movie is zero.

Originally posted by Bucaro

Hey, remember that woman who won like 5mm for burning herself with McDonalds cofee b/c she didn't know it was hot. This is peanuts compared to that IMHO. It is just SAD

Just a few corrections to the numerous false statements you've just made here:

She was awarded $8M by the jury, but the judge ignored the jury and awarded more like $2M.

And the plaintiff in that case proved that

• McDonalds wanted to switch to a cheaper coffee.
  
• Taste tests showed that customers didn't like the cheap coffee.
  
• But, they also showed that, if the coffee was hotter, the people didn't notice the taste.
  
• McDonalds' studies estimated that, if they raised the temperature of the coffee, a certain number of people would be injuted.
  
• However, of the people injured, very few of them would sue, and very few of them would win, and they wouldn't win much.
  
• McDonalds concluded that they would make more money from the coffee, than they'd pay to the people they injured.
  

I never go there. They are much more expensive then other video stores around town.

Originally posted by Bazooka Tooth

I mean you have to assume that there is a catch to a statement like "no late fees."

You mean, like, the numerous other companies who have no late fees? (They just count on the fact that you're going to want something else, and you can't rent anything else untill you return the first one)

Bottom line, Blockbuster is on its way out because of companies like Netflix.

Which, if I'm correct, doesn't charge late fees.

I see Blockbuster being out of business in 5 years. They are being seriously hurt by the Netflix-type mail services, and even those services will be hard-pressed to keep up with technology. Its only a matter of time before first-run movies are released as PPV events.

'Renting' movies is on the endangered species list.

My bro in law got a coupon for late fees, they have 15$ in late fees and the coupon is to forgive up to 50.00. When he went to turn them in they said they were no good at that Blockbuster in Hagerstown and they had to pay...

I told him I NEVER would have paid that one..

Blockbuster is actually getting into the online thing.