Utah and 46 other states have reached an agreement with Blockbuster Inc., the nation's largest movie-rental chain, to settle allegations that it misled consumers in an advertising gambit touting its "no late fees" policy.
The company has agreed to post more signs giving renters detailed information about potential charges if they do not return movies and games in time. It also will provide one-time refunds or credits to customers who paid a "restocking fee," or the full price of the movie they rented.
Blockbuster has agreed to pay the 47 states about $629,000 to reimburse legal costs incurred in preparing litigation, company spokesman Randy Hargrove said. A lawsuit was never filed. New Jersey, New Hampshire and Vermont have not joined the compact.
Utah has 56 stores participating in the program, which began in January. The state's share of the settlement is $9,000, Jeff Buckner, a spokesman for the Utah Attorney General's Office, said Tuesday.
In neighboring Idaho, only Blockbuster locations in Lewiston and Hayden Lake were subject to the agreement, but that state's share of the settlement was $23,000, the Idaho Attorney General's Office said.
The discrepancy may be because Utah was late in joining the effort against the company.
"There was a core group that was working on the settlement. They got more," Buckner said, adding that Utah's settlement funds would be split between the attorney general's fund and the consumer protection education fund.
Blockbuster's attention-grabbing campaign, however, will remain in effect despite the settlement.
"The policy is not changing," Hargrove said. "The questions were never about the substance of the program. They had to do with the communications that supported the program."
Since its launch on Jan. 1, many customers — drawn by the program's promise — were angry to discover that overdue game and film rentals were automatically converted to a sale on the eighth day after the due date. If people returned it after the eighth day, the sale charge was dropped but customers were assessed a $1.25 restocking fee.
Those additional charges, the states argued, amounted to late fees.
"A fee by any other name is still a fee," Utah Attorney General Mark Shurtleff said in a prepared statement Tuesday. "This case is important to remind advertisers that catchy slogans can be misleading and even violate the law."
But company officials insist customers weren't deliberately misled. Even New Jersey, which independently sued Blockbuster over the late fees policy in February, acted without consumer complaints, they point out.
"Less than 4 percent of movie and game rentals went to auto sale," Hargrove said. "That tells us customers are using the program exactly as intended."
No complaints were reported to the Utah consumer protection division, but officials with that agency still asked the Utah attorney general's office to become a party to the lawsuit that was being prepared.
Salt Lake-resident John Smith, who was returning rentals to a Blockbuster on Tuesday afternoon, said he couldn't understand what the fuss was about. Smith, who rents frequently from Blockbuster, said he likes the "no late fees" policy.
"I've never felt cheated by it," he said.
Hargrove said Blockbuster would implement certain "communications enhancements" to clarify the policy. Those include phone calls and postcards to remind customers that products are overdue, and offering "End of Late Fees" brochures and additional signs on store entrances and exits.
How to get refund
Associated Press
Blockbuster Inc. customers who were charged with buying a rented movie or game or were charged a restocking fee are eligible for full refunds, under a settlement announced Tuesday.
Refunds cover charges on products rented on or after Jan. 1.
Customers can get complaint forms at participating stores or by writing to Blockbuster, 1201 Elm St., Suite 2100, Dallas, TX 75270, Attention: Vice President Steve Krumholz Sr.
Deadline for submitting forms is April 28 or within seven days of discovering late-fee charges.