Blockbuster's 'No Late Fees' Promise (2005)
The ads said no late fees. The fine print said Blockbuster would just charge your card for the whole movie instead.
In January 2005, Blockbuster ran a national ad campaign built around three words: "No Late Fees."
The fine print told a different story. Keep a movie a week past its due date, and Blockbuster would charge your card the full retail price of the disc — treating it as a purchase rather than a late return, and keeping most of that charge even if you brought the movie back within a month anyway.
Customers who thought "no late fees" meant no fees at all complained in large enough numbers that attorneys general in dozens of states opened investigations. Blockbuster settled in 2005, agreeing to refund confused customers and clarify the policy in future advertising.
The campaign also cost Blockbuster hundreds of millions of dollars in late-fee revenue it had built its margins around — at the exact moment Netflix was signing up subscribers with no late fees and no fine print at all.
Filed from public reporting: the New York Attorney General’s office, NBC News.
