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Blockbuster Settles No Late Fee Suit
fistfullast33l writes "In a followup to a previous Slashdot story, Blockbuster has settled a lawsuit with 47 states and the District of Columbia over its No Late Fees advertising campaign. The New York State Attorney General's Office released the following: '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. 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.' Blockbuster will be refunding customers as part of the deal." Additional commenary available on MSNBC.
... what 3 states were not involved, and why?
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And the problem is that when people get hit by this fee, they don't do anything about it - they just roll over and pay. So good to see some action being taken!
Physicist, consultant, science communicator
You've revealed the other side of this dishonest advertising campaign. It hurts competitors by convincing customers of an impossible scenario. When the competitors refuse to stoop to the same level as Blockbuster, customers are lost. This campaign in particular is so unbelievably slimey that you just have to wonder at the people running the company's legal department. I mean, I can understand crooked executives and mentally-challenged marketers, but did the lawyers actually think that they were going to get past consumer protection laws?
The world's burning. Moped Jesus spotted on I50. Details at 11.
I went to a blockbuster a couple days ago, and they have a big sign on their door that explains the details.
Yes, they will charge you full price for the item after 7 days. However, if you bring the movie back after 7 days you will not be charged full price. You will be charged a "restocking fee" instead of a "late fee". Granted, it wasn't that bad at $1.50, but I still laughed after reading about the "restocking fee."
Perhaps my cynicism has got the best of me, but I have a question to ask the crowd. How unlikely is it that Blockbuster is going to suffer in the court of public opinion as a result of this fiasco?
...from the truth-in-advertising dept...
It is rather hard to find news reports of organizations that have crumbled due to such odious behavior.
Hear, hear!!
What surprises me the most is that the program is optional to franchises. I think autonomy of franchises in promotions is probably one of the worst moves a business can make. If McDonalds advertises the Big Macs for 10 cents but the local McD's isn't doing that sale, I'm less likely to go to any McD's anywhere because if a company can't maintain consistincy is their sales and promotions, how can I assume there will be consistency in quality? How can I assume walking into a particular branch of of a store will be worth my time and money.
Free MacMini
The sad part about this is that I can compare Blockbuster with Mr. Ben Ahore of the Central Bank of Nigeria on behalf of the Nigerian National Petroleum Company and not feel that I'm really exercising that much poetic license.
The world's burning. Moped Jesus spotted on I50. Details at 11.
I've been driving by these Blockbusters for a while now. They all have giant round signs that say "No late fees!". There is no fine print on the signs.
Don't blame Durga. I voted for Centauri.
Here in Canada, all members of BlockBuster recieved a brochure outlining the terms of this, and it really isn't all that surprising. Does anyone really expect a video store to allow you to keep a video for as long as you want?
The fine print you speak of was when they originally signed the membership contract. Those terms changed with this promotion. The reason Blockbuster got into trouble because they told the people on the sales floor not to tell the customers about the "you just bought the movie" part of the new terms.
Up to 20% of stores are franchises and many revolted against the "No More Late Fees" program, causing customers to be totally confused. "No More Late Fees" commercials running on all channels and yet my local Blockbuster still charges late fees?
I've been covering this story and more at: http://www.hackingnetflix.com/
- MikeK @ HackingNetflix.com
I figured there was probably a catch, but also thought that maybe they were adopting a Netflix-type model, where a customer could keep a movie as long as he likes, but couldn't rent any more until the late one was returned.
I think this forced our Giant Eagle's "Iggle Video" stores to make everything a 7 day rental instead of the previous 1 day rental for new stuff and 5 days for older stuff. As a result there is never anything new in stock. I wish they'd go back to the 1 day rental for new movies.
I would believe this. NetFlix survives with no late fees. When I first saw the commercial I thought that perhaps they had adopted the NetFlix subscription model instead of paying by the rental. They sort of have, but it's not via this program.
This program is pretty cool, because it allows you a bit more flexibility with the rental and it punishes those who abuse it. It's just stupid that they'd flagrantly say "no more late fees" as if you could just rent a movie and never return it.
You have to admire the chutzpah of their PR guys. From today's press release:
I doubt they're too worried about the $630,000 settlement. This is a company that took in almost $6 Billion in the last twelve months. As an AP story puts it:
So even after putting out nearly a million bucks to pay off the states and put up new signs, they will still make money. Just consider it a cost of doing business.
Soylent Green is peoplicious!
BB used to charge the full rental price even if the rental was a few hours late. This pissed a lot of people off of they had to pay another $4.38 for being 3 hours late.
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My franchise (Southern Stores, INC) came out with a per/day late fee. For a 5 day rental - they are all 5 days now at my store - then it is $.90/day late fee charged to the account. This is the entire late fee divided up into 5 days. People complain a LOT less about a $.90 late fee than a $4.50 late fee. We also changed our due date to midnight instead of noon on the second day.
We started this program and tested it beginning in January 2004 with a few stores and eventually all of our stores adopted it (the franchise covers Tennessee). Our customers were much more happy than previously.
Then BB Corporate, all of the national stores, came out with this "no-late fees program" and began to advertise it via national advertising outlets. Well, people in Tennessee watch network and satellite programming and thus saw these advertisements. You want to see confusion in the market place?
Our franchise decided to NOT participate in the corporate program because we think our customers like the current program not to mention it is much simpler. Almost every day people will walk into my store and when I tell them they have late fees they immediately start to mention that BB has no more late fees. Then I have to be the bad guy and sit there and explain to them that we are a franchise store and don't participate in that corporate program; yeah - it really tends to upset some of the customers. If they still complain then I hand them a memo from our franchise office which explains all of this in writing and even offer to give them the number. I remember a few months ago I saw a posting on the Net that mentioned an exec from the franchise slamming the corporate policy in the memo we hand out and that his remarks could potentially be used in court against the national corporation. I cannot find that article now however. I've been told that only 5% of all BB stores are not participating.
Also something worth noting is that we seem to be getting less and less copies of titles in on their respective release dates. For example if we would normally get 50 copies of this week's new relases last year, we might only be getting 30 or so. From what I can tell it is deliberate and accomplishes several things:
1) Less inventory to purchase
2) More likely to be 100% out of stock for a longer period of time
3) Keeps the customer coming back to the store more often because their chances of getting a new title the first week are slimmer and slimmer
4) Creates more space in the store for sell-thru items
5) We are told to suggest to customers that they purchase the movie from our shelves instead of rent it.
Compare our prices to Wal-Marts!!! WOW we are sometimes as much as $10 higher than Wal-Mart! I think that their model is to have less and less to rent and then try and get the customer to keep coming back so that they spend more often, or that they actually purchase it where there is a greater profit margin (or at least it gets the customer in the mindset of purchaseing, not just renting, from Blockbuster)
Here is an article from our local paper in Nashville which mentiones these issues:
http://www.tennessean.com/local/archives
I apologize for the poor grammer, spelling, and incoherence but I've spent the better part of 40 something in the studio working on a project for school.
The opinions and thoughts of this posting are in no way official commentary of Blockbuster or Southern Stores, INC no do they reflect or represent either entities. Any official comments or news releases will come from proper and official channels. (besides, I graduate from college in a month and will be quitting then)
Libertas in infinitum
- They advertised "No late fees", but did not sufficiently disclose their "restocking fees".
- They advertised on national TV this "no late fees" scheme, yet not all Blockbuster franchise stores participated, leading to customer confusion.
- Some Blockbuster franchises, who were not participating in the "no late fees" scheme, still used the "no late fees" marketing materials (banners, etc) despite not participating in the "no late fees" program!
Now, I know that you are really smart and all, but wouldn't you, upon entering a blockbuster store displaying the "no late fees" banner, have reasonable cause to believe that that store was participating in the "no late fees" program? Well, some stores that weren't participating still proudly displayed the "no late fees" banner. Don't you think that's just a bit deceptive and confusing?The problem isn't just that the American poublic was having trouble grasping the new program. The problem was the Blockbuster really was being deceptive.
"Avoid employing unlucky people - throw half of the pile of CVs in the bin without reading them." -- David Brent