NEWARK – Attorney General Peter
C. Harvey filed suit today against Blockbuster,
Inc., alleging that the movie and game
rental chain violated New Jersey’s
Consumer Fraud Act and Merchandise Advertising
Regulations by failing to disclose key
terms of its new “No More Late Fees”
policy.
The
Attorney General and Division of Consumer
Affairs filed a complaint in Superior
Court in Mercer County 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 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,” Attorney
General 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.”
The
State 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,
which operates approximately 170 stores
in New Jersey, implemented its “No
More Late Fees” policy on January
1.
The
State’s complaint
(33k pdf) alleges, in part, that Blockbuster
engaged in fraudulent and/or unconscionable
business practices by:
-
Failing to clearly and conspicuously
disclose the terms of the “No
More Late Fees” policy in its
advertisements, in-store signage and
through store personnel;
-
Failing to clearly and conspicuously
disclose to consumers that rentals would
automatically be converted to a sale
and charged on the customer’s
credit card or membership account after
a certain period of time, which varied
from store to store;
-
Failing to clearly and conspicuously
disclose to consumers that although
the sale charge would be reversed if
an overdue video were returned within
30 days after the “sale”
date, there would be a $1.25 restocking
fee for such overdue items at corporate-owned
stores and the restocking fee varied
among franchise stores;
-
Failing to clearly and conspicuously
disclose that some franchise stores
were not participating in the “No
More Late Fees” policy; and
-
Prominently displaying in-store signage
that simply refers the consumer to a
store associate for details, then providing
consumers, through store personnel,
with incomplete, inaccurate and/or inconsistent
information about the “No More
Late Fees” policy.
“We
expect businesses to completely and clearly
tell their customers about all relevant
terms and conditions regarding their policies,”
Acting Consumer Affairs Director Jeffrey
Burstein said. “We will not tolerate
the withholding of such important information
from consumers, especially when it results
in unexpected out-of-pocket expenses.”
Deputy
Attorney General Cathleen O’Donnell
is representing the State. Investigator
Taryn Rucinski is investigating this matter.
_ag-ph_update.gif)
