[media-credit name=’AJ MACLEAN/Herald photo’ align=’alignnone’ width=’648′][/media-credit]Blockbuster, Inc. is currently under scrutiny by 47 states because of allegedly misleading consumers with their new “No Late Fee” policy.

Wisconsin, along with 46 other states and the District of Columbia, reached an agreement Tuesday with Blockbuster to settle allegations the movie-rental firm swindled its customers into believing they would not be charged fees if they returned materials late.

Wisconsin Attorney General Peg Lautenschlager announced she would join other attorney generals in the settlement, because the corporation failed to reveal if a consumer rented a video or game for more than seven days, his or her rental would convert to a sale and a “restocking” fee of $1.25 would apply if the customer tried to return the item within 30 days.

“This case is important because it reminds advertisers that they cannot use a catchy slogan or phrase if that slogan is misleading,” Lautenschlager said in a release. “Slogans can be misleading and violate the law if they do not fully and accurately describe the complete terms and conditions attached to the offer.”

As part of the settlement, Blockbuster will pay states $630,000 to pay for legal costs associated with the allegations. Of this, $12,500 will go to Wisconsin. The video store will not end its new program, but has agreed to implement ways to more effectively communicate the “No Late Fee” policy to consumers.

By the end of this month, Blockbuster will have more in-store signage, including door decals and brochures in several locations. The company will also redesign its receipts to make them more personalized — program details as well as the price of the item if purchased will now be included on each receipt.

According to Blockbuster spokesperson Karen Raskopf, the company has been very helpful with the customers who were confused about the program.

“When customers came in and said they didn’t understand the $1.25 charge, we started telling our stores not to charge [the consumer] for the first time,” Raskopf said. “We think [the complaints] will be minimal, but if [consumers] didn’t understand the policy, we want to refund the $1.25 restocking fee.”

University of Wisconsin junior Liz Sauer said she believes the new program’s advertising was confusing and misleading.

“This is technically false advertising because there are still fees that must be paid if the movie is returned late,” she said.

Blockbuster began advertising for the new policy in December 2004 and the program started on the first of this year. Since the implementation of the new policy, sales have “increased significantly,” according to Raskopf.

“We think a good part of this [success] is because of the ‘No Late Fee’ program — more people are renting from us more often, and customers clearly like no late fees,” Raskopf said.

There are currently 5600 Blockbuster stores in the United States, and a total of 75 stores in Wisconsin.

UW sophomores Katie Freedman and Lara Spodek expressed their satisfaction with the new policy, saying they now rent movies about twice a week.

“We love [no late fees]!” Freedman said.

Consumers who feel they were duped may be entitled for a refund and can file complaints by obtaining a form from Blockbuster stores or the Wisconsin Department of Justice Consumer Protection Office.