Blockbuster Video must pay refunds or credits to consumers who were billed during the company’s “No Late Fees” campaign and change the way it promotes the program, state Attorney General Roy Cooper said.

“People rent movies to be entertained, not to be misled about charges and fees,” Cooper said. “Blockbuster’s catchy slogan may have brought in business but it turned out to have a surprise ending, as some customers found out.”

Cooper’s office along with Attorneys General of 47 other states announced an agreement with Blockbuster to resolve claims that the movie and video game rental chain misled consumers about its “No Late Fee” program.

Blockbuster began promoting the program in December 2004 with promises that consumers wouldn’t face late fees if they returned rented videos, DVDs or video games within seven days of the due date.

However, Cooper and the other attorneys seneral contend that Blockbuster failed to make it clear to customers that they would owe the entire cost of the item rented if they turned it in more than seven days after the due date. If customers then decided to return the purchased product, Blockbuster charged them an additional “restocking” fee of $1.25, Cooper said.

The attorneys general also allege that Blockbuster did not sufficiently disclose that the program was offered only at participating stores, causing some customers of non-participating franchise stores to think they wouldn’t face late fees. In North Carolina, Blockbuster operates 143 company-owned stores and has one franchise store. There is a store on U.S. 1 in Aberdeen.

Under the terms of the agreement, Blockbuster must change all future advertising about no late fees or limited late fees so that it includes a clear and conspicuous explanation of charges that consumers might face. In addition, the company’s rental return policy and charges for late returns must be clearly displayed at all Blockbuster stores.

For the next six months, the company has agreed to meet other conditions, including posting the terms and conditions of its “No Late Fees” program at multiple spots in all Blockbuster stores, removing all window and internal signs advertising the program, and asking franchised stores not to advertise the “No Late Fee” program unless they are participating in it.

Blockbuster also agreed to provide a full refund or credit to any customers who purchased a video or paid a restocking fee under the “No Late Fee” program. Customers can seek restitution for any item they rented and then had to purchase before they learned about the Blockbuster policy.

Rented items must be returned in good condition. Customers who already returned late items and paid a restocking fee can also request a refund of that fee.

Customers who rented from a nonparticipating franchise store that did not make it clear that they weren’t a part of the “No Late Fee” program can write to Blockbuster to receive rental coupons equal to the number of rentals on which such charges were assessed. Consumers are eligible if they rented videos after Dec. 31, 2004, and prior to March 29, 2005.

To claim their refunds or coupons, consumers should put their request in writing and explain that they did not understand the “No Late Fee” program.

Customers can claim their refund by writing to Blockbuster at 1201 Elm Street, Suite 2100, Dallas, TX 75270, Attention: Mr. Steve Krumholz, senior vice president, by April 28, 2005, or within seven days of discovering the extra charges.

Complaint forms are available at Blockbuster stores and from the offices of attorneys general. The restitution period ends September 29, 2005.

Consumers who feel they are entitled to a refund from Blockbuster can also file a complaint with Cooper’s Consumer Protection Division by calling 1-877-5-NO-SCAM or by downloading a complaint form at www.ncdoj.com .