The Checkout

A New Netflix Settlement

A proposed class-action settlement involving Netflix customers has been rewritten to address complaints that the agreement did little for consumers while rewarding the company and lawyers who filed the suit.

The new version of the settlement, which is scheduled to be reviewed by a California Superior Court judge at a hearing today, still gives the plaintiff's' attorneys more than $2 million. However the chief complaint about the previous settlement -- that it would have resulted in Netflix customers paying higher monthy fees -- has been resolved.

As a result, most objections to the settlement have been dropped, including those filed by the Federal Trade Commission and Trial Lawyers for Public Justice .

Under the previous proposed settlement, subscribers of the DVD-by-mail services would have received a one-month upgrade entitling them to additional DVDs, a value that ranges form $2 to $6, depending on the plan a customer had. Consumers would have continued to be billed for the more-expensive service after the upgrade unless they specifically requested a return to the less expensive plan. The revised agreement still gives customers a one-month free upgrade, but it ends automatic renewal of the more expensive service.

With the elimination of the automatic renewal, "there is no risk that customers will be unwittingly duped into higher membership charges," said Richard Frankel, an attorney for the trial lawyers group.

Once the settlement is approved by the court, Netflix will contact its customers, even those who may have signed on to the earlier agreement, to give them the choice of staying on the upgraded service after the free one-month expires. If they do nothing, their service will return to the less expensive level.
Read more in my story in today's paper. And for more details on the settlement, check the agreement's Web site.


By  |  March 22, 2006; 11:09 AM ET Legal Battles/Settlements
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Comments

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The attorneys still get the cash. The deal still stinks.

Posted by: andrew | March 22, 2006 4:41 PM

This settlement has no benefit to me. I have the basic, 3-movies-at-a-time plan, and the turnaround time for a returned movie is 2 days, so there is no benefit to me in being upgraded unless I plan to watch more than one movie a day.
The lawyers win again.

Posted by: sherman | March 22, 2006 5:25 PM

What they really needed to address was the recent revelations of different turnaround times for different customers. Netflix has been slowing turnaround times for customers who return movies faster than others, causing them to get basically the same amount of movies in a given month as slower returners. This is saving Netflix a HUGE amount of money in postage and replacement costs. The customer losses again and big business and the lawyers still pocket obscene profits. Shakespeare was right...."The first thing we do is..."

Posted by: Charles | March 22, 2006 8:26 PM

I have discovered another tactic that Netflix uses and that is to send out scratched or damaged movies in order to lessen the amount of movies per month per customer. In my one month as a customer, I have had 3 films of poor quality and the turnaround for returns isn't fast enough to compensate the delay and the lessened value of the subscription. If they do not check the movies or customers have not complained that is one thing, but they are playing a dangerous game with the public if they choose to ignore individual quality in order to focus on volume.

Posted by: chuck | March 24, 2006 11:14 PM

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