Blockbuster Settles 'No Late Fees' Claims for $630,000

Blockbuster Inc. (BBI), the top U.S. movie renter, has agreed to pay $630,000 to settle claims from 47 states that said its "No Late Fees" rental policy deceived customers, the Pennsylvania attorney general's office (search) said Tuesday.

Under the agreement, Blockbuster will also be required to make full refunds to customers who claim that they were misled and were charged restocking fees or the full price of movies rented if they were returned seven days after the due date, a statement from Pennsylvania Attorney General Tom Corbett's office said.

It said the agreement, which also includes the District of Columbia, would dramatically alter the way Blockbuster advertises its "No Late Fees" policy in the future.

New Jersey last month had filed a lawsuit that accused Blockbuster of failing to disclose key terms of its new rental policy.

Under the "No Late Fees" policy, Blockbuster said customers would have a one-week grace period after the rental due date. If a movie or game were returned after the grace period, the customer would be charged for the purchase of the item.

If the item were returned within 30 days, the customer would receive an account credit but would be charged a restocking fee of $1.25.

Full details of the settlement were scheduled to be released later on Tuesday, Corbett's office added in a brief news release. The Pennsylvania attorney general's office was one of six leading state agencies to negotiate the agreement with Blockbuster.

A Blockbuster spokesman did not immediately return calls seeking comment.

Blockbuster -- which recently abandoned a bitter takeover battle for No. 2 U.S. movie renter Hollywood Entertainment Corp.(HLYW) -- unveiled the "No Late Fees" policy in December in an attempt to reinvigorate its business amid growing competition from online renters to discount retailers including Wal-Mart Stores Inc. (WMT).