Film-Tech Forum ARCHIVE: Blockbuster's "No Late Fee" policy = SCAM

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Posted by Randy Stankey (Member # 64) on 07-09-2005, 10:28 PM:

I'm sure that most people here heard about Blockbuster Video's advertising campaign where they proclaim, "NO MORE LATE FEES!!

According to the Pennsylvania Attorney General and the A.G. of 47 other states, it was a scam.

www.attorneygeneral.gov

It turns out that, while Blockbuster Video CLAIMS to not charge late fees, they just charge your credit card for the value of the movie you rented if you don't bring it back in 7 days. If you bring it back in less than 30 days they will refund your money but they will charge you a "Restocking Fee".

quote:

Blockbuster “No Late Fees” Program Settlement

Pennsylvania consumers may have heard of the recent settlement reached by Attorney General Tom Corbett and 47 other states with Blockbuster, Inc. The settlement resolves allegations that Blockbuster’s “End of Late Fees” program and related promotion efforts failed to adequately inform consumers of the terms and conditions of the program, including the fact that consumers could incur new charges for overdue movie rentals.

What Does the Settlement Mean?

Blockbuster has entered a legal settlement, filed with the courts in 47 states and the District of Columbia, in which it agrees to stop engaging in business practices which the states maintain were deceptive and misleading. The agreement also requires Blockbuster to implement changes to the in-store materials promoting its “No Late Fees” program and to clearly and conspicuously disclose the terms and conditions of the program in future advertising. Additionally, the settlement requires Blockbuster to comply with state Consumer Protection Laws in the future and pay the states’ costs to investigate and settle this matter.

What about Restitution?

Under the settlement, Blockbuster must provide restitution to any consumer who did not understand the terms of Blockbuster’s “No Late Fees” promotion and, as a result, paid restocking fees or were charged the purchase price of a rented game or movie and have not been refunded those charges by Blockbuster. Restitution will be a one-time refund of the consumer’s first payment of additional charges under the “No Late Fees” program. Consumers must file complaints on or before April 28, 2005.

Complaints may be filed:

» With the Attorney General’s Bureau of Consumer Protection by calling 1-800-441-2555
» By sending a complaint directly to Blockbuster’s Texas headquarters at:
Blockbuster, Inc.
ATTN: Steve Krumholz
1201 Elm Street
Suite 2100
Dallas, TX 75270
» With your local Blockbuster store

Any consumer who rented a video from a Blockbuster store in Pennsylvania prior to the complaint deadline and who incurred sale or re-stocking charges because they did not understand the terms of the ‘No Late Fee” policy but did not learn of these charges until after April 28th may still file a complaint within seven days of becoming aware of the charges. Blockbuster will honor these complaints for up to six months, or until September 25, 2005.

If you have a problem relating to a movie rental or the purchase of another good or service, you can call the Attorney General's Bureau of Consumer Protection toll-free HOTLINE number, 1-800-441-2555.

Hey, honey! Let's stay home and make it a "Blockbuster Night"! [fu]

Posted by David Stambaugh (Member # 1102) on 07-09-2005, 10:37 PM:

The original Blockbuster TV ads proclaiming "No Late Fees" were very misleading. I can't believe that ad campaign was ever approved for airing.

Posted by Mike Heenan (Member # 392) on 07-09-2005, 11:05 PM:

It may be misleading but the info wasn't exactly hidden, it was certainly in almost every article I read about the new policy when they brought it out.

Posted by Bobby Henderson (Member # 840) on 07-10-2005, 01:36 AM:

I must agree the Blockbuster Video "no more late fees" campaign was a bit misleading -or even a scam. It seems like another one of those dumbassed American sales droid money making schemes developed while in drunken stupor on a country club golf course. "We'll take advantage of American laziness, make money from it, improve the stock price a little and get a big fat bonus" (then take a big gulp of beer and try to chip out of the sand trap).

However, I really must play "devil's advocate" on this one. Did the general public forget about something called personal responsibility? Most video stores give you 5 whole days to watch a DVD before you have to return it. That's more than enough time to watch a 2-disc title loaded with a ton of extras. IMHO, you pretty much have to fall victim to a serious brain fart to keep a 5 day rental past a week.

The folks filing lawsuits may have forgotten the early days of video stores where you had only 1 night to watch the show. If you didn't bring it back on time, you got to pay the full rental price for each extra night you kept the tape.

In those days most video stores were mom and pop shop operations that didn't have 377,888,886 copies of the damned movie in stock. So they were pretty serious about getting that tape back and diligent in charging fines to cure the laziness of a few renters.

The problem still exists in the largest of video stores when it comes to independent film releases and older "catalog" DVD releases. No store keeps lots of copies of those movies in stock. I recall having to raise some hell at a local video store to get to rent the only copy of "Ghost in the Shell" they had. Some dummy rented it and simply forgot he had it in his house. Or maybe he just wanted to keep it and hope the store would forget he had it. Those kind of folks need to pay the full freaking price for the DVD. Hell, after awhile even most libraries will charge you the full price to replace a book if you forgot you still had it.

I'm not the only one who hates it when a title you want to rent is never in stock -mainly because one asshole out there won't return the damned movie. I think some people keep the movies on purpose and just don't go back to the video store all to try to avoid the late charge. After so many days, charge their damned credit card for the price of the movie.

Posted by Adam Martin (Member # 641) on 07-10-2005, 11:31 AM:

Personal responsibility? No.

The original Blockbuster campaign made it look like they were going the way of Netflix where, as long as you pay your monthly subscription fee, you keep the movie until you feel like returning it. No matter how long your lazy ass takes to put it in the envelope and take it out to the mailbox. (In my roommate's case, two months. Seriously.)

Of course, the Blockbuster website now clearly states the terms of their "No Late Fees" program.

Blockbuster.com: The End of Late Fees Terms

Posted by Andrew McCrea (Member # 674) on 07-10-2005, 12:46 PM:

I ageree with Mike Heenan. Everything I saw about it being brought in explained how that all worked. People have to realize that there would've been a catch, and that's when you ask for the company's policies. I saw banners in store windows that explained it too.

Posted by Adam Wilbert (Member # 1184) on 07-10-2005, 03:45 PM:

As Brad mentioned in the first Blockbuster thread ( [Wink]

) The policy is very lenient. You pay, what 3.99?, for a week, and can keep it for 30 days more for only $1.25 (the restocking fee). No other brick-and-mortar shop has a fee structure like that. Even the public library charges more for overdue media. From what I read, their thinking was that if you really like the movie, go ahead and keep it. Kind of a try-before-you-buy deal. This thing was completely not a scam, but there are just dumb people who thought they were getting a free lunch. Did they honestly think that they could rent a movie for a few bucks and NEVER have to return it?

Posted by Mitchell Dvoskin (Member # 751) on 07-10-2005, 05:29 PM:

The issue was never whether or not it is a good deal, or even if the details were available in the stores printed material. The issue was that the television ads were very misleading. They were.

Posted by Jason Whitlock (Member # 3077) on 07-10-2005, 05:42 PM:

the ads had the fine print near the end mentioning the restocking fee after 30 days and the rent-to-own charge after 7 or 10 days...

Posted by Mike Heenan (Member # 392) on 07-10-2005, 05:59 PM:

Even if it was about the TV ads, which I dont see anything about it in the quote Randy provided, you'd still think people who got "scammed" by the original blockbuster late fees policy, to be on guard about the new policy, and at least ask questions at their local store if they didn't get it.

Posted by Joe Redifer (Member # 3) on 07-10-2005, 06:19 PM:

I wonder why there is a $1.25 restocking fee. Does it really cost that much to put the item back on the shelf? If someone refused to pay the restocking fee, would the DVD sit on the return counter forever, never ever being put up for rent again? I want to know where that $1.25 goes.

It is a penalty fee, not a restocking fee. Blockbuster is lying.

Posted by Adam Wilbert (Member # 1184) on 07-10-2005, 06:51 PM:

following that logic, the local shop I visit doesn't have late fees either, they just let you rent the movie twice in a row without having to go through the hassle of coming back into the store. At that rate, I might as well have bought the movie after 30 days, cause that's how much I'd owe. At least blockbuster has a fee cap at about $20.00, at which point you own the movie, which is better than owing $20.00 and still having to return it.

Posted by Bobby Henderson (Member # 840) on 07-10-2005, 06:56 PM:

The term "restocking fee" is possibly meant as a politically correct term. They just need to call it what it is: asshole tax.

Posted by Adam Wilbert (Member # 1184) on 07-10-2005, 08:58 PM:

Bobby, you sound angry about something...

The place I go to has one day rentals. Because of that, I rarely have a problem getting the movie I want when I want it. Thats the main reason I stopped going to blockbuster/hollywood altogether. The crummy selection that they offer is frequently checked out indefinately.

Posted by Randy Stankey (Member # 64) on 07-10-2005, 10:26 PM:

My point was not about whether people are lazy, nor was it about whether people should have to pay for bringing a rented movie back late. (They are... And, they should.)

My point was that the ad was so misleading that 48 states and the District of Columbia saw fit to sue them in court on behalf of the general public.

I've seen some cases where a few states' A.G. sue then the ad gets retracted but when 49 out of 51 A.G. gang up on a company it's because they smell a rat.

Frankly, I don't go to Blockbuster very often. When I rent movies, it's from the local grocery store. (Wegmans.) or from another video place that's near my house. I just don't care for B.B.

quote: Adam Martin
The original Blockbuster campaign made it look like they were going the way of Netflix

That's exactly what I thought too.

I saw their ad a few months ago that proclaimed, "No More Late Fees!! No More Late Fees!!" I saw some news items in the paper and on N.P.R. radio that covered the story. NONE of them said anything about the fee structure. Like Adam, I thought they were trying to go toe-to-toe with NetFlix. Later on, after they retracted their original ad, I saw their replacement and noticed the fine print that talked about the 7-day grace and the "Restocking Fee".

I thought, "Aha! THAT'S how they do it!... They get to keep your money in their bank account for a month!"

If they ring up 1 million extra sales a month, that's $30,000,000.00 extra dollars they can have in the bank. (Assuming the average video costs $29.95.) Even if they have to give all that money back they:

1) Still get another $30M coming to them for next month's sales.

2) They get to keep the interest that $30M made while it was in their account.

Even if they only get 1% interest it still adds up to $300,000 per month. Maybe Bobby is right. It's nothing more than a "Stupid Tax".

But, not fully disclosing the terms of a new agreement to your customer(s) then using THEIR money to pad your bank account is playing dirty pool!

Posted by Joe Redifer (Member # 3) on 07-10-2005, 11:03 PM:

One day rentals kick ass! I remember going to video game shops back in the days of the 16-bit and even 32-bit gaming. I could almost always find what I wanted. If not, it would be returned soon. I rented tons and tons of games. Now you rent the game for a week. Good luck finding what you want to play. Plus Blockbuster rarely puts up more than one copy of each game. This makes it very difficult to find the game that you'd want to try before you buy. So these days people must resort to downloading games instead of renting them to see if their $50 would be well spent. And once they're downloaded, you have them forever, so no need to buy them. Blockbuster has singlehandedly increased piracy thirtysevenfold.

Posted by Bobby Henderson (Member # 840) on 07-10-2005, 11:25 PM:

quote: Adam Wilbert
Bobby, you sound angry about something...

I'm angry there is no Santa.

No, not really. My idea about calling the restocking fee "asshole tax" is just calling it what it really is. I do things at times where I'm being an asshole. If I forget I had a rental DVD in my house for nearly a month, I'd happily pay the $1.25. That's getting off cheap -even if they called it "asshole tax." At least I didn't have to pay for nearly a month's worth of rental late charges, which might be more than what the DVD itself is worth.

On the Netflix thing, I do agree Blockbuster's campaign sounded like the Netflix model. I even thought of Netflix the first time I saw the Blockbuster's "no more late fees" commercial. Still, I always figured there had to be a catch. It just sounded too good to be true. And even if Netflix' business model actually works, I'm not sure how they make any money off of it. Somehow the subscription fee has to balance out the equation of a single DVD disc perhaps taking a couple years worth of rentals to pay for itself.

I didn't think of the positive cash flow, compounding interest angle favoring Blockbuster.

quote:
But, not fully disclosing the terms of a new agreement to your customer(s) then using THEIR money to pad your bank account is playing dirty pool!

Agreed. That is dirty pool, especially when the campaign sounds too good to be true.

Posted by Bruce Hansen (Member # 281) on 07-13-2005, 12:27 PM:

I think that at least part of the problem, is that some people will believe what ever they want to, without checking the facts. They hear just a part of something, make the rest up in their heads, and then blindly believe it all. I have said, for many years now, that we should teach classes in school, about not believing something that you hear, just because it is what you want to believe; CHECK THE FACTS. There are a lot of people out there that will use this failing, to get people to believe things that are just not true. If your information is faulty, you WILL make a bad decision.

Posted by Mike Blakesley (Member # 26) on 07-13-2005, 06:25 PM:

quote: Bobby Henderson
I'm angry there is no Santa.

Wait.... are you saying there is NO SANTA??!? [Confused]

Posted by Randy Stankey (Member # 64) on 07-13-2005, 10:36 PM:

quote: Bruce Hansen
There are a lot of people out there that will use this failing, to get people to believe things that are just not true.

That's what we have an Attorney General's Office for.

It's unfortunate that our Attorneys General have to spend so much of their time protecting people from scams like this instead of more important things.

What's more unfortunate is the fact that it's not illegal to take negative interest loans from your customers without telling them. That's just plain WRONG! [Mad]

Posted by Matt Fields (Member # 3211) on 07-14-2005, 08:37 AM:

quote: Randy Stankey
Even if they only get 1% interest it still adds up to $300,000 per month.

Bank interest rates are based on years, not months, so 1% APR on 30,000,000 would yield about 25,000 a month - 300,000 a year. You could do a little better depending on how it compounds. They could do better then 1% in some money market funds though.

Lots of businesses make interest off of customers money. I don't find anything wrong with it. That is exactly how a bank works.

The dirty thing Blockbuster did was say there were no "late fees" when there are, they just choose not to call them "late fees".

Posted by Jeremy Jorgenson (Member # 2989) on 12-18-2005, 02:37 PM:

From IMDB's Movie/TV News - 16 December 2005

found here: http://us.imdb.com/news/sb/2005-12-16/#4

quote: IMDB
Blockbuster Admits Some Stores Have Ended No-Late-Fee Policy

On the heels of reports that attorneys general in Arkansas, Alabama, Mississippi, and Tennessee are looking to allegations that some Blockbuster franchise stores have begun charging late fees again without notifying customers, Blockbuster issued a statement on Thursday acknowledging that about 160 of its 515 franchisees have dropped the "no late fees" policy. The company said that the independent stores had done so because they could not afford to buy the inventory needed to allow customers to keep the rented movies for lengthy periods of time.