The Checkout

Netflix Settlement Falls Under Attack

The national public interest law firm Trial Lawyers for Public Justice has long been taking aim at what it considers unfair class-action settlements, filing objections to the settlements it believes offer lots of money to the plaintiff attorneys but very liittle--usually coupons with relatively small monetary value--to consumers. The group's latest target is a proposed class-action settlement involving Netflix customers.

The law firm Trial Lawyers for Public Justice has posted this graphical representation of the Netflix settlement on its Web site.

The national class-action lawsuit, filed in September 2004, alleged that Netflix misled consumers by failing to deliver DVDs as promised, within one business day. In reality, the suit said, it would often take as long as four to six business days for customers to receive their requested DVDs. And that meant customers could watch fewer videos than they had signed up for under Netflix's monthly membership plan.

The proposed settlement, which TLPJ officials said is worth $4 million max, includes $2.5 million in attorney fees. But that's just one of the problems with the proposed settlement, according to TLPJ, which filed a legal challenge . More troublesome, TLPJ says, is what consumers get: Current Netflix customers would get one-month upgrade to receive more DVDs, a value that ranges from $2 to $6, depending on what plan a customer is signed up for. But if consumers fail to cancel that upgraded service at the end of 30 days, they would then be billed for the more expensive service every month after that. Meanwhile, former Netflix customers, would get a month's free service.

TLPJ says the proposed settlement is just a marketing tool designed to increase Netflix's revenues. In the long run, customers could be worse off, especially if they fail to opt out of the more expensive service. It is asking both sides to come up with a more fair settlement, as it has done on other class action settlements.

Netflix spokesman Steve Swasey said the company agreed to the settlement because it is in the best interest of its shareholders and customers. Netflix did not admit any wrongdoing in the settlement.

A court hearing on the proposed settlement and TLPJ's ojbections will be held Jan. 18 in California Superior Court in San Francisco.

By  |  January 9, 2006; 10:00 AM ET Legal Battles/Settlements
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Typically, the biggest loser amongst the plaintiffs, defendant and plaintiffs' attorneys is in fact the plaintiffs.

I have been a plaintiff in something like 6-7 cases in the past five years and the average settlement I've received is around a dollar, typically in the form of a credit or coupon. The plaintiffs' attorneys earned millions, none of which (I'm assuming) came in the form of coupons.

Does no one else see the hypocrisy of these cases?

Posted by: Steve C. | January 9, 2006 11:04 AM

A Netflix customer has a website up in regards to this:

At one point he was urging people to opt out of the settlement, which requires a letter (details on the site) but now he seems to have changed tactics. He says he has 4000 formal objections from other customers that he'll be sending in.

Posted by: Rob | January 9, 2006 11:05 AM

When I read about that settlement it looked fishy to me. I'm just gonna cancel my subscription.

Posted by: Justin | January 9, 2006 11:36 AM

I signed up for the settlement - and I have no idea when it's going to go into effect! But my gripe? Although there was a settlement, the service hasn't improved!! MOST of the time my DVDs get to me in a two day turnaround (send it in Monday, they get it Tuesday and sent out my new DVD the same day, which I receive Wednesday) but lately, it takes days longer - which makes no sense to me. I sent my last DVD back on Thursday morning, so they should've received it Friday. As of 11:41 on Monday, they still supposedly haven't received it. Blockbuster's service wasn't much better, so I'm reluctant to switch again. * sigh *

Posted by: Nicole | January 9, 2006 11:43 AM

Why would you cancel your subscription because the "settlement looks fishy"? That makes no sense at all.

Posted by: John | January 9, 2006 2:48 PM

Nicole, I have the same problem with Netflix. I assumed it's the postal service (I'm in Chicago)and not the fault of Netflix. This is interesting that people in other parts of the country are experiencing the same thing.

Posted by: Cheryl | January 9, 2006 5:17 PM

As a 8 p/m NF customer, I get nothing from this scam of a settlement. I sent them a letter to opt out.

See here for info on how others are doing this:

Posted by: Peter | January 10, 2006 1:26 PM

I have the same problem but documented. Yesterday Netflix recieved 9 movies back one missing extra DVD. All showed up on my queue and I did get the email confirmations. I expected 8 DVD's to ship yesterday and all were available. The same morning 6 movies shipped and 2 were in process. Later in the day 5 movies shoed up as shiped and 3 are now for the next day instead of Netflix's agreement online that advertises same day shipping when received.

All of which I write is documented in word docs. Netfix took another movie out of my queue and now is only shipping 4 for today and 4 for tomorrow. I recieved the emails stating such. I pay for 8 movies unlimited and I can prove that Netflix is not only false advertising but outright commiting a fraud. I have started actions and a compliant with the FBI in which handles internet fraud found at URL

Posted by: Bob | January 11, 2006 8:11 AM

One more bit of info since my post this morning. I live in Denver Co and we have King Soopers a grocery store chain that has movies for $1.00 per movie and 3 days to watch then return. I can get 51 movies for 51.00 but with Netflix I might get 30 for the same price.

Posted by: Bob | January 11, 2006 8:40 AM

Nicole wrote: MOST of the time my DVDs get to me in a two day turnaround (send it in Monday, they get it Tuesday and sent out my new DVD the same day, which I receive Wednesday) but lately, it takes days longer - which makes no sense to me.

I am having the very SAME experience as Nicole. I am in Phoenix, Arizona. For the past 3-4 weeks, it is taking one week or more for Netflix to replace my returned DVDs. I am able to watch only 3 DVDs a week, which is the max number of DVDs I can have at any point of time.

Posted by: Libran Lover | January 12, 2006 9:06 PM

I have not opted out of the settlement and will contact the attorney's for a settlement. I am not getting service from netflix and furthermore I am being ripped off for the movies that I send back as well. I mail a movie back the same day I get the movie and it has now taken 5 days to get a movie back. I have copied and pasted my queue into an MS Ecell spreadsheet and have all dates documented for the Colorado State Attorney General's Office as well as other agency's and further investagation.

I have also filed a complaint with the FBI for internet fraud and sales practices in which should have have happened in the first place. Failure to deliver as advertised.

My next complaint is being filed with the SEC for stock fund fraud for inflating prices for an advertised product and failure to produce.

Netflix will need to stop thier practices or let the chips fall where they may!!!

Posted by: Bob James | January 13, 2006 7:54 PM

I assume that the published Netflix policy was updated in response to the class action suit, but now they state outright on their web site that they will throttle delivery of DVDs to people who rent too many.

See "Allocation, Delivery and Return of Rented DVDs" in their Terms of Service. I have pasted main paragraphs below...


Allocation, Delivery and Return of Rented DVDs

We reserve the right to allocate and ship DVDs among our subscribers in any manner that we, in our sole and absolute discretion, determine. In addition, we will, in our sole and absolute discretion, determine the quantity of DVDs we purchase for any particular title and the level of staffing and number of shipments to be processed at each distribution center. As a result, we may not always send you the top choices from your queue, and we may not ship out your next DVD on the same day that we receive one from you. At present, our goal is to ship you the DVDs listed highest in your queue. Also, we currently try to ship you DVDs from the distribution center closest to you so that you get movies quickly. Often, on the same day that we receive a DVD from you, we will ship the next available DVD from your queue. In certain instances, your next available DVD will not ship until at least one business day following our receipt of your returned movie. This can occur, for example, when your top choices are not available to you from your closest distribution center or the number of shipments to be processed by the distribution center on that day has been exceeded. When this happens, your DVD will likely ship on the next business day and may come from an alternate distribution center.

In determining priority for shipping and inventory allocation, we give priority to those members who receive the fewest DVDs through our service. As a result, those subscribers who receive the most movies may experience that (i) the shipment of their next available DVD occurs at least one business day following return of their previously viewed movie, (ii) delivery takes longer, as the shipments may not be processed from their local distribution center and (iii) they receive movies lower in their queue more often than our other subscribers. Other factors that may affect delivery times, include, but are not limited to, (i) the distance between the distribution center from which your DVD was shipped and your delivery address, (ii) the timing of your placement or adjustment of movies in your queue and (iii) circumstances impacting delivery by the U.S. Postal Service.

Posted by: smelly girl | February 12, 2006 7:32 PM

I'd heard of crummy Netflix service but had no reason to investigate till now. Netflix just folded on me, like a grifter slipping out of town. A distribution center is 3 miles from my home. I enjoyed mail-in Monday, new-DVD Wednesday for quite a while. Now: Calling the Castle. The Big Sleep. Not to mention "Short Wait" stretching on for weeks - did Netflix allot 5 disks for all of east of the Mississippi? Plus, it has been my habit to *alert* Netflix to my intent to rent future-release DVDs - by moving a title to my "Saved" queue - when that title is ***still in theatrical release***. All good things come to an end. Google once aspired not to be evil. Netflix once provided a vital service. We, The Grifted, must now wait for the next riverboat to dock and offload its Confidence Men...

Posted by: Wayne Hoobler | March 26, 2006 1:56 AM

Tried the "free" trial for two weeks use the one at a time format, got the flic on monday morning-watched-took to work and mailrd back that afternoon at 3pm est. Netflix got it the next day and sent my next fic the same day. Got it wensday watched and returned on the same day, They got it the next day "thursday" and sent my next flic out the same day. Got it friday watched and returned it the same day again... They got it the next work day "monday" my next flic showed up on saturday .a wait of 5 days and I was billed to my credit card for a questionable service. It id now friday of my first week as a paying member and they got back the video monday and I have gotten nothing but the story that it should show up to day or tommorow... I'm calling my credit card provider to have payment canceled for non delivery of service. If netflix wants to "throtel" me back they can go to hell. My free trial cost more than it's worth and not even a movie in a week? I can due better at the video stores on my way to and from work. Netflix is like used toilet paper...don't hold it in your hand just flush it and wash the crap away!

Posted by: | April 21, 2006 11:47 AM

I've opted out of the settlement. Netflix certainly does throttle heavy users, and the settlement is a joke. Netflix isn't changing their behaviour due to the suit, they're changing their policies. If you read their new policies, they basically say that Netflix can do whatever it wants or doesn't want to you. Lovely new policy. I'm hoping that other companies will now rise and take the business from Netflix. I'm also hoping that by opting out of the class-action suit, the new policies won't apply to me, but I don't have much faith.

Posted by: Staci O. | June 26, 2006 12:53 PM


Posted by: BIG CHIEF | July 29, 2006 7:55 PM

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