Washington, DC - Attorney General Robert J. Spagnoletti announced today that he and the Attorneys General of 47 states reached agreement with Blockbuster Inc. to settle allegations that it misled video and game rental customers in the advertising of its "No Late Fee" program.

The Attorneys General alleged that the advertising campaign was misleading because it boldly proclaimed the "End of Late Fees" but did not clearly disclose that if a consumer kept an item for more than seven days after its due date, the consumer would automatically be charged for the selling price of the video; and that if the consumer later returned the item for a refund of the sales charge, the customer would be charged a "restocking" fee of $1.25 (or more, at some franchise stores). The Attorneys General also alleged that there was insufficient disclosure of the fact that the program was offered only at participating stores and that some customers of non-participating franchise stores who thought they would not have to pay late fees were required to do so.

Blockbuster began advertising the "The End of Late Fees" and "No Late Fees" on December 15, 2004, with the program starting on January 1, 2005. The program is available at all company-owned stores and those franchise stores that have chosen to participate. In the District of Columbia, there are seven Blockbuster stores, all company-owned.

"This case is important because it reminds advertisers that they cannot use a catchy slogan or phrase if it is misleading to consumers," Attorney General Spagnoletti said.