For you Blockbuster haters out there, here's a juicy tidbit.
BLOCKBUSTER SETTLES INVESTIGATION INTO ADVERTISING FOR "NO LATE FEE" PROGRAMAttorney General Eliot Spitzer today announced a multi-state agreement with one of the nation’s largest movie rental chains, settling allegations that it misled consumers in an advertising campaign.
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.
In New York State there are 258 company-owned stores and nine participating franchise stores.
"Consumers deserve clear and complete information about retail offers," Spitzer said. "In this case, an offer that sounded good carried significant hidden costs."
Under the terms of the settlement, Blockbuster has agreed that in any future advertising for the "No Late Fee" program, it will:
• Not represent that there are no late fees or only limited late fees unless such representation is accompanied by and appears proximately to a clear and conspicuous disclosure of the existence of any charge, including rental fee, restocking fee, or charge associated with a rental transaction that has been converted to a sale; and
• Advise of any limitation on the stores participating in the offer.
Blockbuster also agreed that all participating stores will clearly and conspicuously display Blockbuster’s policy for return of a rental product and applicable charges if a product is not returned. For the next six months, Blockbuster also will provide disclosure of the "No Late Fee" program’s terms and conditions through notices: in store entrances and at point-of-sale; on policy statements at the end of store aisles; and in brochures in every store.
Blockbuster also will:
• Remove from its stores the current external window signage and the current internal signage advertising the "No Late Fee" program, and will request and recommend that participating franchise stores do the same;
• Link the main page of its website (blockbuster.com) to the terms and conditions of the "No late fees" offer; and,
• Tell consumers who are sent written notification that a rental has been converted to a sale that to be credited for the sale price, each consumer must produce the credit card originally used to establish membership.
Blockbuster also agreed to provide a full refund or credit to any customer who failed to return the item within the thirty day period, but who now returns it in good condition by April 28, 2005.
If the customer already has returned the item but has paid a "restocking" fee, the customer can obtain a refund of the "restocking" fee. A request for restitution must be made in writing and allege a failure to understand the "No Late Fee" program.
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.
As part of the settlement, Blockbuster will pay the states a total of $630,000 for attorneys fees, costs of investigation and consumer protection. New York State’s share will be $12,500.
For New York State, this case is being handled by Assistant Attorney General Carlos Rodriguez under the supervision of Bobby Colón, Assistant Attorney General In Charge of the Rochester Regional Office.
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