Busting Blockbuster’s Ad

In the commercial, jubilant crowds in front of a Blockbuster store cheer the end of late fees as Roy Orbison’s “It’s Over” plays in the background. But is it? Customers who keep movies and video games rented from Blockbuster beyond their due dates might not be charged a late fee, but they risk being hit with restocking fees or having the full retail price of the titles slapped onto their credit cards.

Blockbuster’s ads last month prompted New Jersey’s attorney general to file a civil lawsuit alleging that the company is violating the state’s Consumer Fraud Act by failing to properly explain its rental agreements. He offers up Blockbuster’s online FAQ section (which drags on for 12 pages) as proof that the company’s “no more late fees” claim isn’t as straightforward as the ads pretend.

The filing shows that if regulators do their jobs, it won’t take costly class-action lawsuits to protect consumers from misleading ads. Such suits usually just line an attorney’s pockets while generating little more than discount coupons for the plaintiffs.

Movie lovers who expect Blockbuster to let them keep a copy of “Garden State” for more than a month without charging some extra fee aren’t living in the real world. Further, Blockbuster has a point when it argues that its new late-return policy is more consumer-friendly than the one it replaces.

But Blockbuster’s advertising doesn’t shout “new and improved.” Instead, it clearly states that late fees are a thing of the past. Consumers shouldn’t have to wade through hundreds of words of boilerplate to determine the real cost of renting “Ray.”

Regulatory actions and lawsuits aren’t the only reason it’s expensive to produce deceptive ads. The Internet has given consumers more power over corporations, with blogs and chat rooms quick to slam companies that cross the line. In the end, marketers must compute whether misleading ads are worth the bad PR.