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Faced with a declining market share in the DVD rental business, Blockbuster has decided to virtually eliminate late fees for people who rent movies from one of its more than 4,500 stores. The move is seen as a way of stopping the erosion of its business because of the no-late-fees policy used by online DVD subscription rental services like those run by Netflix, Wal-Mart and even, ironically, Blockbuster.

But there’s a catch.

While renters won’t have to pay what Blockbuster calls an “extended viewing fee” when the DVD is overdue, now, once the DVD is more than a week past due, Blockbuster will simply assume that the customer wants to buy it, and will charge the shopper’s credit card for the price of a used DVD, usually about eight bucks.

If the person eventually decides to return the DVD, they get that money refunded, minus a $1.25 restocking fee.

The company conceded that the new policy, which goes into effect on January 1, is likely to have an impact on its profitability. The Wall Street Journal notes this morning that late fees were expected to contribute between $250 million to $300 million to operating income next year.
KC's View:
Thanks, but we’ll stick with Netflix.

A late fee by any other name is still a late fee. We suspect that this is only going to annoy customers even more.

This strikes us as a perfect example of a company that doesn’t get it, that believes cosmetic changes will be enough to fool customers who already are deserting it.