Tuesday, March 29, 2005

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Attorney General Abbott Settles Dispute Over Blockbuster's No Late Fees Program

AUSTIN - Texas Attorney General Greg Abbott today announced an agreement with Dallas-based Blockbuster to settle allegations that the video and game rental company deceived consumers in the advertising of its “No Late Fees” program.

Attorney General Abbott alleged Blockbuster’s advertising campaign failed to clearly disclose that a consumer who rented a video or game from Blockbuster and kept it out more than seven days after its due date would be charged the selling price of the video or game. If the consumer later wanted to return the item, he would be charged a “restocking” fee of at least $1.25. Abbott also alleged Blockbuster didn’t sufficiently disclose that the “No Late Fees” program was offered only at participating stores – a fact that caused some customers to rent items under the false impression they would not have to pay late fees.

Misleading Blockbuster TV Ads
Misleading Blockbuster TV Ads

Blockbuster Ad
Misleading Blockbuster Brochure / Web Banners

“Advertisers may not use catchy slogans if those slogans are misleading,” Attorney General Abbott said. “Blockbuster’s ‘No Late Fees’ program wasn’t what it claimed to be, and this settlement ensures that the company will fully disclose to Texas consumers the complete terms and conditions attached to the offer.”

Click here for settlement with Blockbuster

Blockbuster, which has more than 500 stores across Texas, began advertising its “No Late Fees” promotion on television and radio and in stores in December 2004. Under the terms of the settlement with Texas and 46 other states, Blockbuster agreed to fully disclose in future advertising the existence of“restocking” fees or other charges associated with a rental that has been converted to a sale.

In addition, Blockbuster has agreed that its Web site and stores will prominently display the terms of its return policy and applicable charges if a video or game is not returned. Any current “No Late Fees” signs in company-owned stores must be removed, and participating franchise stores will be asked to do the same.

Blockbuster also promised to provide a full refund or credit for any rental item that was converted to a sale under the “No Late Fees” program upon the return in good condition of the items rented. The company will also give refunds of “restocking” fees.

Customers who believe they are entitled to a refund may obtain complaint forms at company-owned stores and participating franchise stores or by writing Blockbuster at 1201 Elm Street, Suite 2100, Dallas, TX 75270, Attention: Mr. Steve Krumholz, Sr. Vice President. A refund request must be submitted by April 28, 2005, or within seven days of discovering that late fees were being charged. To be eligible for a refund, customers must have rented the product after Dec. 31, 2004.

Customers who have a claim against a nonparticipating franchise store that failed to indicate it was not participating in the “No Late Fee” program will be reimbursed with Blockbuster rental coupons.

Of the roughly 500 Blockbuster stores in Texas, more than 400 are participating in the “No Late Fees” program.

As a courtesy, the Attorney General’s Office is providing a copy of Blockbuster’s complaint form on its Web site at www.texasattorneygeneral.gov. However, customers are responsible to submit the completed form in person at a Blockbuster store, or by mail at the address above.

Credit/refund request form for participating Blockbuster stores

Coupon request form for non-participating Blockbuster stores