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 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.
