Video rental chain settled with states, which say customers were misled.
When Blockbuster announced the end of late fees in December, some customers were unaware of the program’s fine print.
On Tuesday, Blockbuster announced that it will improve communication of the program as part of a settlement with 47 states, including Missouri.
Under the “End of Late Fees” program, the cost of the movie or game is automatically billed to the customer’s credit card if the rental is kept for more than seven days. If it is returned within 30 days the customer is charged a $1.25 restocking fee. Missouri Attorney General Jay Nixon said in a news release that Blockbuster’s campaigns were misleading to customers.
“Blockbuster’s ads and window signs with huge letters gave customers the unmistakable impression that they no longer have to pay anything for late rental returns, but the late fees were simply replaced by other fees with a different name,” Nixon said.
In the settlement, Blockbuster agreed to refund customers who feel they were misled by the policy and to place more signs and information in stores explaining the terms and conditions of the “End of Late Fees” program.
Nixon said he hopes that better communication will help customers better understand the program.
Karen Raskopf, spokeswoman for Blockbuster, said that the no-late-fees program is not changing, but communication about the program will just be improved.
Since the program began, rental transactions have been up significantly, Raskopf said.
“We have received few complaints about the no late fees. Most people are returning their rentals on time or keeping them a day or two longer,” Raskopf said.
Rentals were returned after the seven-day grace period less than 4 percent of the time.
Blockbuster also agreed to pay $630,000 in the settlement, including $12,500 to the Missouri Attorney General’s Office, which will be used to cover legal expenses in future consumer-protection cases similar to this.
Jim Gardner, press secretary for the attorney general, said he hopes this case will serve as a reminder to businesses to keep their advertising truthful.
“They need to be fair and honest in their advertising tactics,” he said. “We want to be able to protect consumers.”
Customers who feel they were misled and are entitled to a refund should go to the Blockbuster they rented from to receive a refund. All refund requests must be made by April 28.