Blockbuster Offers to Settle Late-Fee Suit

ByABC News
June 5, 2001, 7:17 AM

M I A M I, June 5 -- Blockbuster Inc. is offering to settle 23 class-action lawsuits by customers claiming they've paid inflated fees for overdue video rentals and that the company profited unfairly as a result.

All customers charged extended viewing or non-return fees at itsstores between Jan. 1, 1992, and April 1, 2001, will be eligiblefor refunds if Blockbusters offer is approved by the federal court. The offer includes certificates for free video rentals andcertificates for $1 off nonfood items.

Total Value: $450 Million

Blockbuster also is proposing to pay a total of $9.25 million tothe plaintiff's attorneys, which it said will constitute about 2percent of the face value of the certificates available under thesettlement. That would make the total settlement approach $450million. Dallas-based Blockbuster, the largest video-rental chain in theworld with about 7,700 stores, began running ads in newspapers lastweek and has posted the offer on its Web site. To qualify, customers must fill out and return claim forms nowbeing attached to store receipts before Dec. 15. The certificateswill be issued and can be redeemed between Jan. 15, 2002, and May15, 2002. "Defending lawsuits like these requires both time and money, soin the best interest of our company we've decided to settle thecases," Ed Stead, executive vice president and general counsel,told The Miami Herald in today's edition.

Late-Fee Policy to Remain in Place

The agreement would settle class-action lawsuits filed byindividuals in Jefferson and Harris counties in Texas which accuseBlockbuster of charging excessive "extended viewing fees" andchanging its policy without first notifying customers. The video rental company has defended its practices and said theextended viewing fees will remain. A hearing is to be held Dec. 10 in federal court in Beaumont,Texas, to determine if the proposed settlement should be approved. Class-action status consolidates large cases, helps largenumbers of plaintiffs sue a defendant more economically, andprevents similar plaintiffs from winding up with different resultsafter trials.