ATTORNEY 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 Fee" program.

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 said.

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 receive 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, Attention: Mr. 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 restitution 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.  

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