March 29, 2005
GENERAL ANNOUNCES SETTLEMENT WITH BLOCKBUSTER OVER ‘NO LATE FEE’ ADVERTISING
Attorney General Curran announced today that his Consumer Protection
Division, together with the offices of 46 other Attorneys General,
entered into a settlement with Blockbuster Inc. over allegations
that it misled consumers in the advertising of its "No Late
Blockbuster began advertising the "The End of Late Fees" and "No
Late Fees" on December 15, 2004, with the program starting
on January 1, 2005. The program was used at all 113 company-owned
Blockbuster stores in Maryland and those franchise stores that
chose to participate. The Attorneys General alleged that the advertising
campaign was misleading because Blockbuster failed to adequately
disclose that if a consumer kept a rented video or game out more
than seven days after its return due date, the consumer would be
charged for the selling price of the item. If the consumer then
returned the item, after seven days past the due date but no more
than 30 days past, the selling price would be refunded but the
consumer was charged a "restocking" fee. If the consumer
did not return the video after 30 days past the due date, he or
she would remain charged with the selling price of the item–i.e.
he or she had "purchased" the item.
Blockbuster agreed to change its advertising. Blockbuster also
agreed to prepare consumer brochures explaining its rental policy
and to post notices on the doors and other prominent places throughout
stores explaining its policy with respect to rentals that are
not returned when due.
Consumers need to understand all charges associated with a transaction," Curran
Blockbuster also agreed to provide a full refund or credit to
customers who were charged the selling price for rental items
that were not
returned within 30 days of their due dates, and who were not
aware that their rental would be converted into a purchase. To
the refund or credit, the customer must return the items in good
condition. Customers who returned an overdue item within 30 days
of its due date and paid a "restocking" fee can obtain
a refund of that fee. In either case, a request for restitution
must be made in writing and state that the consumer did not understand
that the charges would be imposed under Blockbuster’s "No
Late Fee" program.
Blockbuster customers who believe they are entitled to a refund
can fill out a complaint form at the local store or write to
Blockbuster at 1201 Elm Street, Suite 2100, Dallas, TX 75270,
Steve Krumholz, Sr. Vice President, by April 28, 2005, or if
after that, within seven days of first discovering that an expenditure
in addition to the initial rental sum is or was required. The
period ends September 29, 2005.
As part of the settlement, which Blockbuster entered into without
any admission of wrongdoing, Blockbuster will pay the states
a total of $630,000.