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Blockbuster settles N.J. late-fee suit

Vidtailer reimburses Garden State with $140,000

Even as Blockbuster takes heat from Wall Street for ending late fees, it will have to pay up for charging too many of them.

The vidtailer has agreed to reimburse a total of $140,000 to the state of New Jersey and to Blockbuster customers for fine-print charges it levied.

Settlement will not significantly affect the bottom line of the rental giant, but it could further hurt the image of the company, which is already losing ground to Netflix and Wal-Mart.

Suit was filed nearly a year ago by the state of New Jersey. Attorney General Peter Harvey alleged Blockbuster’s “restocking” fees amounted to a late fee, rendering its promise of no late fees misleading.

The company’s policy was to convert rentals kept longer than one week to a sale, which Harvey alleged it did not sufficiently disclose. And while it reversed the sale charge if the rental was returned, it also charged consumers a $1.25 “restocking fee” if the film was 30 days or more overdue, which Harvey said it also did not make clear.

Harvey said, “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.”

Company will pay a total of $90,000 to consumers in the form of store credits and an additional $50,000 in legal and other fees to the state. It also agreed to make its policy more transparent in ad and marketing materials.

More vidtailers are coming up with inventive agreements that aim to compete with Netflix’s subscription rental plans without cutting into revenue, and the settlement could open the door to legal scrutiny in other instances.

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