Blockbuster's new policy on late fees has New Jersey regulators taking a closer look.
In a lawsuit, the state charges that Blockbuster failed to disclose that overdue rentals are automatically converted to sales on the eighth day after the due date.
The state wants the nation's biggest video rental chain to reimburse customers who wound up paying for a video because of an overdue rental. It also wants compensation for customers who were charged late fees by stores that were not participating in the new policy, but failed to make that obvious.
Blockbuster eliminated late fees on games and movies starting Jan. 1, but customers who miss a one-week grace period are billed for buying the item or charged a $1.25 restocking fee.
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