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New Jersey Sues Blockbuster

February 19, 2005
No more late fees? Not quite, says New Jersey Attorney General Peter Harvey, who has filed suit alleging that the movie and game rental chain violated New Jersey’s Consumer Fraud Act by failing to disclose key terms of its new “No More Late Fees” policy.

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The suit charges that Blockbuster's advertising fails to disclose that overdue rentals are automatically converted to a sale on the eighth day after the due date and 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,” 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 late fees in some stores, so-called ‘restock fees,’ and credit card or membership account charges equal to the purchase price of the video.”

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 suit 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.

“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.”

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