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Blockbuster Settles Over 'No Late Fees'

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NEW YORK Blockbuster will augment consumer communications and pay about $630,000 to settle claims by 47 states and the District of Columbia that the movie rental chain misinformed consumers with its "No Late Fees" campaign.

The agreement, disclosed by the office of Oregon attorney general Hardy Myers, requires Dallas-based Blockbuster to "make refunds to consumers who claim the campaign misled them into thinking they could keep the video or DVD for as long as they liked."

States not included in the settlement are New Jersey, which has a pending separate suit, Vermont and New Hampshire. The "No Late Fees" effort was supported by a national TV spot that launched in January, via independent agency Doner in Southfield, Mich.

Consumers complained that overdue game and film rentals were automatically converted to a sale on the eighth day after the due date. If they then tried to return the items, they were charged a $1.25 restocking fee, according to the Oregon attorney general's statement.

Blockbuster will now have to make refunds to consumers who were either charged the restocking fee, or else paid the full price of the movie they rented.

"Our customers will be glad to know that we are not changing our 'No Late Fees' program, but we are adding some additional communications pieces to support the program," Nick Shepherd, president of Blockbuster U.S. store operations, said in a statement.

—Brandweek staff report