The Washington Post reports that the Northern Virginia franchisee that owns 17 Blockbuster locations has decided to reinstate late fees, charging a 99 cent daily late fee to its customers.
The reason that Capitol Entertainment decided to back off the national policy that Blockbuster introduced earlier this year? Because people were slow to bring back hot hit movies, it was impossible for the company to predict when they would be in stock.
It is just the last problem that Blockbuster has encountered with its no late fee policy, which was instituted in order to compete more effectively with Netflix. While Blockbuster underplayed this particular part of its policy, the no late fee scheme also included a caveat – if a person didn’t return a DVD within a week of the due date, the company would assume that the shopper had bought the DVD and charged the cost of the movie to the person’s credit card. Then, if the DVD was returned within 30 days, the money would be refunded, less a $1.25 restocking fee. Attorneys General around the country complained that the program was deceptive and Blockbuster was forced to be more specific in its advertising and to pay $630,000 in fines.
Blockbuster has said that it generated between $250 million and $300 million a year in late fees, but thought that higher rental levels would make up for the lost late fees.
The reason that Capitol Entertainment decided to back off the national policy that Blockbuster introduced earlier this year? Because people were slow to bring back hot hit movies, it was impossible for the company to predict when they would be in stock.
It is just the last problem that Blockbuster has encountered with its no late fee policy, which was instituted in order to compete more effectively with Netflix. While Blockbuster underplayed this particular part of its policy, the no late fee scheme also included a caveat – if a person didn’t return a DVD within a week of the due date, the company would assume that the shopper had bought the DVD and charged the cost of the movie to the person’s credit card. Then, if the DVD was returned within 30 days, the money would be refunded, less a $1.25 restocking fee. Attorneys General around the country complained that the program was deceptive and Blockbuster was forced to be more specific in its advertising and to pay $630,000 in fines.
Blockbuster has said that it generated between $250 million and $300 million a year in late fees, but thought that higher rental levels would make up for the lost late fees.
- KC's View:
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From the beginning of this farce, we said that Blockbuster was being at best disingenuous with its “no late fees” program, and at worst was being deliberately misleading.
It comes as no surprise that franchisees are starting to back away from the program – though we suspect that it may more to do with lost revenue than with dissatisfied customers.
Doesn’t matter to us, though. We stay firmly committed to Netflix, which we think is a vastly superior service anyway.
