N.J. Sues Video Chain Over ‘Late Fees’

DALLAS Blockbuster’s “No More Late Fees” campaign violates New Jersey’s consumer protection laws, according to a lawsuit filed by state Attorney General Peter C. Harvey on Friday.

Harvey said the Dallas-based video and game rental chain did not disclose that overdue rentals are automatically converted to a sale on the eighth day after the due date. If customers return the overdue items within 30 days after the “sale” date, Blockbuster will reverse the sale charge, but impose a restocking fee, the suit says.

The complaint also alleges that Blockbuster fails to prominently disclose that some of its stores do not participate in the “No More Late Fees” policy and continue to charge late fees.

“Blockbuster boldly announced its ‘No More Late Fees’ policy, but has not told customers about the big fees they are charged if they keep videos or games for more than a week after they are due,” Harvey said. “Blockbuster’s ads are fraudulent and deceptive. They lead people to believe that an overdue rental will cost them absolutely nothing when, in fact, customers are being ambushed with (a) late fees in some stores, (b) so-called ‘restock fees,’ and (c) credit card or membership account charges equal to the purchase price of the video.”

Blockbuster responded with a prepared statement that it has “taken a number of very thorough steps to let customers know how our new program works. Blockbuster has trained store employees on how to effectively communicate the program to customers, both on the sales floor and at checkout.”

The stores also have free brochures explaining the program, the company said.

New Jersey is seeking restitution for Blockbuster customers whose overdue rentals were converted to a sale, were charged restocking fees and/or charged late fees by a non-participating store. The state also seeks civil penalties of up to $10,000 for each violation of the Consumer Fraud Act.

Blockbuster, the nation’s largest video rental chain with 4,600 stores, implemented its “No More Late Fees” policy on Jan. 1. It operates approximately 170 locations in New Jersey.

The ad campaign announcing the new policy was one of the largest in the company’s history, Blockbuster said in January. A TV spot called “Chant,” created by Doner of Southfield, Mich., has aired since January. At the time, Blockbuster was also launching an online rental effort to compete with Netflix and Wal-Mart.