Posted at 1 p.m., Tuesday, June 5, 2001
Blockbuster offers rental deal to settle late-fee suits
Associated Press
DALLAS — Blockbuster Inc., besieged by class-action lawsuits claiming it charges exorbitant late fees, is offering to settle by sending out millions of coupons good for free video rentals.
Blockbuster officials say the company hasn't done anything wrong, and they won't change their policy on overdue rentals.
Not good enough, say some lawyers and disgruntled customers, who accuse the video-rental giant of making unfair profits and trying to make a legal end-run around their lawsuits.
Dallas-based Blockbuster, the world's largest video-rental chain, faces 23 class-action lawsuits in several states. Under an offer given preliminary approval by a state court judge in Beaumont, customers who were charged late or non-return fees between Jan. 1, 1992 and April 1, 2001 could get coupons for movie rentals and other discounts.
In court documents, Blockbuster said the face value of the coupons would be about $460 million.
"We don't think we've done anything wrong. Everything we've done has been in our customers' interest, and we're not going to change our practices," said Ed Stead, Blockbuster general counsel.
Stead said the company was offering a settlement to avoid the time and expense of trials, and it liked the idea of settling the dispute by issuing coupons to patrons — "It brings them back into our stores."
Late fees are important to Blockbuster's bottom line. In 2000, the company earned about 19 percent of its rental income from late fees — $795.8 million out of $4.16 billion.
Blockbuster used to add a charge for every day a rental was late. In February 2000, it changed its policy to treat late tapes as if the customer had rented them for another two-day or five-day period. Both practices were attacked in lawsuits.
The coupons would be good between Jan. 15 and May 15 of next year. Customers can get coupons by submitting a claim by Dec. 15.
In September, Blockbuster settled a similar class-action lawsuit in Michigan by issuing coupons for free video rentals to customers who were hit with late fees.
