Blockbuster will provide refunds or rental coupons to customers who believed the company's advertising program "No Late Fee" program meant there were no late fees.
The refunds are part of a settlement by Nevada Attorney General Brian Sandoval and and the attorneys general of 46 other states and the District of Columbia.
Eligible customers are those who rented videos after Dec. 31 and prior to Tuesday. Refund coupons apply only to late fees on items in the initial rental transaction after Dec. 31. The restitution period ends Sept. 27.
Consumer Advocate Adriana Escobar Chanos and Sandoval reached agreement with Blockbuster Inc. to settle allegations that it misled consumers in the advertising of its "No Late Fee" program.
As part of the settlement, which Blockbuster entered into without any admission of wrongdoing, the company will pay the states a total of $630,000 for attorney's fees, the costs of investigation and for consumer-protection actions.
The attorneys general alleged the advertising campaign was misleading because it failed to disclose that if a customer who rented a video or game from Blockbuster kept the item out more than seven days after its return due date, the consumer would be charged for the selling price of the video.
If the consumer later wanted to return the video, the consumer would be charged a "restocking" fee of $1.25, or more at some franchise stores. They also alleged there was insufficient disclosure that the program was offered only at certain Blockbuster participating stores.
Blockbuster began advertising the "The End of Late Fees" and "No Late Fees" on Dec. 15, with the program starting on Jan. 1.
The program is available at all company-owned stores and those franchise stores that chose to participate.
Nevada has 49 company-owned stores and eight franchise stores.
"This case is important because it reminds advertisers that they cannot use a catchy slogan or phrase if that slogan is misleading," said Escobar Chanos.
"Slogans can be misleading and violate the law if they do not fully and accurately describe the complete terms and conditions attached to the offer."
Information about the settlement may be obtained at www.blockbuster.com.
Customers may also obtain forms at corporate-owned or participating franchise stores, or by sending their requests to Blockbuster, 1201 Elm Street, Suite 2100, Dallas, TX 75270, Attention: Steve Krumholz, by April 28, or if after that, within seven days of first discovering an expenditure in addition to the initial rental sum is or was required.
Forms may also be obtained by contacting the Attorney General's Bureau of Consumer protection hot line at (702) 486-3132.