Suit Claims That Redbox Charges Late Fees Despite Promise Not to

Amanda Bronstad

11-02-2009

A class action has been filed against Redbox Automated Retail LLC on behalf of consumers who claim they were charged late fees on DVD rentals, even though the kiosk retailer advertises that it does not charge late fees.

The suit comes as Redbox, a subsidiary of Coinstar Inc., has filed suits against three Hollywood studios asserting antitrust violations.

Redbox, which was founded in 2002, rents DVDs through 17,000 kiosks nationwide via venues including Wal-Mart Stores Inc. and McDonald’s Corp.

Laurie Piechur, a resident of St. Clair, Ill., who claims to have rented numerous DVDs from Redbox during the past year, said she was charged “excessive and illegal late fees,” along with a “maximum charge” of $25 after she did not return two videos, “Fool’s Gold” and “27 Dresses,” on time. She filed the suit against Redbox on Oct. 21 in St. Clair County, Ill., Circuit Court.

“While it boasts ‘easy $1 a night DVD Rentals’ ‘[w]ith no late fees … ever’ that is not the truth,” the suit says. “Instead, Redbox charges its customers who return a movie even one minute late a late fee in the form of an illegal penalty.”

Specifically, she said, if a customer does not return a video by 9 p.m. on the day following the rental, Redbox charges that customer another $1 for renting the video the second day. Under this scenario, she said, “Redbox can effectively double, if not triple, its revenue on a single DVD, with virtually no increase in its costs, thus in fact closely matching the point of sales price of its competitors, meaning Redbox is not a lower-cost alternative at all.”

After 24 days, the customer can keep the DVD, but Redbox issues a maximum charge of $25 — a price that is “much higher than compared to retail prices for the same disc, which would not be previously viewed or used,” the suit says.

Since Jan. 1, 2002, the fees have amounted to $100 million dollars, according to the complaint.

The suit seeks damages for violations of the Illinois Consumer Fraud and Deceptive Business Practices Act, the Illinois Rental-Purchase Agreement Act and the Automatic Contract Renewal Act, as well as for unlawful penalties and unjust enrichment. The suit was filed on behalf of two sets of nationwide classes: Those who paid $1 to rent a DVD for one night but were charged a $1 fee after returning the disc after 9 p.m. the following day, and those who were charged $25 for failing to return a DVD.

Thomas Maag, a lawyer at Wendler Law in Edwardsville, Ill., who represents Piechur, and Chris Goodrich, a spokesman for Redbox, which is based in Oakbrook Terrace, Ill., declined to comment.

Redbox has filed suits against Universal Studios Home Entertainment, Warner Home Video and 20th Century Fox Home Entertainment, alleging that the studios have established an illegal monopoly over the DVD market and are violating §1 of the Sherman Act, the federal antitrust law. The studios have disputed those claims in court.

Copyright 2009. ALM Media Properties, LLC. All rights reserved.

Page printed from: http://www.law.com

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