Blockbuster Late-Fee Policy Raises Questions
Fri Feb 11, 9:06 PM ET
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By Jill Kipnis
LOS ANGELES (Billboard) - Blockbuster's new "no late fees" policy is billed as a way to satisfy those customers who rent movies or games but forget to return them on time.
But the policy's fine print is raising some potential customer-relations questions, industry executives say.
Though consumers now have an extended grace period to return films and games without extra fees at Blockbuster stores, they ultimately are charged the full retail price of the title (minus the initial rental fee) if they keep it for more than a month. The program, which launched Jan. 1, is now in effect at Blockbuster's more than 4,500 stores in the United States.
According to the Los Angeles Times, several state attorneys general are investigating the company's ad campaign.
Blockbuster corporate spokesman Randy Hargrove says the Dallas-based chain has "received inquiries" but would not disclose from whom. "Once we explain the policy, they seem to understand the details," he says.
Tom Kelley, spokesman for Texas Attorney General Greg Abbott, says that no consumers have made any complaints to Abbott's office, but that "other attorneys general may be looking at this. I did see some e-mails from the national attorney general in Washington."
Calls to U.S. Attorney General Alberto Gonzales and New York Attorney General Eliot Spitzer were not returned by press time.
The video rental and retail trade group Video Software Dealers Assn. believes the policy is beingunfairly targeted.
'NO FREE LUNCH'
"I don't think that any reasonable customer thinks that there ought to be a system whereby they walk into a video store, rent a new release for two days, walk off into the wild blue yonder, never return it, keep it in their library and never have to reimburse a video store for its intrinsic value," VSDA president Bo Andersen says. "Reasonable consumers know that there is no free lunch."
Blockbuster head of U.S. store operations Nick Shepherd says the policy was implemented because the No. 1 dissatisfaction for most renters is late fees.
The chain actually wants customers to return discs as early as possible, he says.
"I need them to bring it back so I can rent it to other people," he notes. "We still have due dates. One of the things we learned is that if you try to explain (the whole program) to the customer at the point of sale ... they aren't interested."
New releases can be rented for two days, catalog titles for seven. Games can be rented for seven days. If a customer keeps a title seven days beyond those deadlines, Shepherd says, they get reminder calls from the store. A card is then sent in the mail notifying them that the title is due back and that the customer will be charged the full price if they do not return it within 30 days.
For instance, if a customer checked out a seven-day rental Feb. 1 and kept it past the Feb. 8 due date, the store would call, then send a card saying that the customer has until Feb. 15 to return the movie or be charged for it. The customer then has another 30 days to return it and get most of their money back.
JUST A LITTLE MORE TIME
Shepherd says the store will charge "the lowest retail price when you rented it and refund the rental fee ... Because there are still some people who don't want to own it, you get 30 days to bring it back and we will charge a $1.25 restocking fee (above the rental fee). We don't want people to keep it if they don't want to. We just want to give them the convenience and flexibility of a bit more time."
Shepherd says that the chain has advertised the details of the policy extensively and that Blockbuster's "heaviest" training program was implemented to fill in store staff. Stores also have brochures for customers explaining the policy.
Understandably, rival rental operations are poking at Blockbuster's campaign. Online rental company Netflix, which pioneered a no-late fees policy, says that Blockbuster is reacting to consumers' high interest in alternative rental options without extra fees.
Netflix CEO Reed Hastings calls Blockbuster's policy "a sign that we are really setting the agenda in the video rental business and they are reacting. It's not really 'no late fees.' It's the 'Blockbuster automatic purchase program."'
Independent brick-and-mortar stores are worried that their businesses could be affected.
"I'm not happy about it at all," says Patty Polinger, owner of Santa Monica, Calif., rental store Vidiots. "It's not good for the whole industry. I don't think customers will be happy when they find out the details about how it works. It could create bad will."
Reuters/Billboard
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