NEWARK
– Blockbuster Inc. has voluntarily
settled a lawsuit filed by the New Jersey
Attorney General’s Office, agreeing
to pay more than $140,000 and to continue
to take steps to ensure that customers
are clearly notified of all terms and
charges under its “No Late Fees”
program, Attorney General Peter C. Harvey
and Consumer Affairs Director Kimberly
Ricketts announced today.
Under
the terms of the settlement, Blockbuster
will provide credits to member accounts
totaling more than $90,000 as restitution
for New Jersey customers who paid “video
restocking fees” and will pay the
State $50,000 for attorneys’ fees
and investigative costs, as well as consumer
protection initiatives by the Division
of Consumer Affairs.
“This
settlement with Blockbuster is about enabling
consumers to make informed decisions,”
said Acting Governor Richard J. Codey.
“We will take strong legal action
whenever necessary to ensure that New
Jersey consumers get a fair deal.”
“We filed suit against Blockbuster
in February 2005 because we had serious
concerns about its ‘No Late Fees’
program,” said Attorney General
Harvey. “The company has taken steps
to clear up any confusion about its program
and has voluntarily entered this settlement,
which will reimburse customers caught
off guard with restocking fees. We want
to make sure that consumers get what they
pay for. This settlement achieves that
objective.”
“Blockbuster
deserves credit for responding to our
concerns and clarifying its ‘No
Late Fees’ program,” said
Consumer Affairs Director Ricketts. “Our
goal in the Division of Consumer Affairs
is to empower consumers in the marketplace
by ensuring that they have complete and
accurate information on which to base
a spending decision. We have met that
goal in this settlement.”
The
Attorney General and Division of Consumer
Affairs filed a complaint in Superior
Court in Mercer County in February alleging
that Blockbuster failed to disclose in
its advertisements (1) that overdue rentals
are automatically converted to a sale
on the eighth day after the due date;
and (2) that if customers return the overdue
items within 30 days after the “sale”
date, Blockbuster will reverse the sale
charge, but charge a restocking fee. The
Attorney General’s Office contended
that the restocking fee was a disguised
late fee. The restocking fee charged by
Blockbuster at corporate-owned stores
was $1.25. Blockbuster, which operates
approximately 170 stores in New Jersey,
implemented its No Late Fees program on
January 1, 2005.
Deputy
Attorney General Cathleen O’Donnell
represented the State in the settlement
with Blockbuster.
The
Settlement
The
restitution will go to New Jersey customers
of Blockbuster’s corporate-owned
stores who paid restocking fees between
January 1, 2005 and April 22, 2005 under
the No Late Fees program. More than 75,000
of those customers have been identified.
Each customer will receive a credit to
his or her Blockbuster account equal to
the first restocking fee the customer
paid.
In
settling the lawsuit, Blockbuster agreed
to clearly disclose all material terms,
including any charges, under its No Late
Fees program in all advertisements and
in-store displays about the program.
Under
the settlement, Blockbuster agreed to
clearly and conspicuously disclose in
its stores – on signs, on receipts
or through store personnel – the
price that will be charged if a movie
or game rental is converted into a sale.
It agreed to reverse any sale by crediting
a customer’s credit card or Blockbuster
account no later than one business day
after the merchandise is returned, provided
the return is made within 30 days of the
date on which the rental was converted
to a sale.
Both
sides agreed to settle the matter without
an admission of any violation or wrongdoing
by the company.
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