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Canadian Chain Ends Late Fees

2 Oct, 2006 By: Jessica Wolf

Leading Canadian rental chain Rogers Video is giving up the long avowed practice of late-fees, taking a few lessons from competitor Blockbuster to heart and looking to the future.

Rogers announced Oct. 2 that it is ending late fees at all of its stores across Canada. There are no restocking fees and no hidden charges of any kind, according to the company.

Rentals will still have a due date, but Rogers customers will have an eight-day grace period in which to return the title. After that, the customer's account at the store will be charged with the going rate for the title minus the already-paid rental fee. Should the consumer return the video, those outstanding account charges will be eliminated in full.

The rules have changed in the rental market, said Chuck van der Lee, president and CEO of Rogers Video. The chain listened to customers who said they liked the flexibility of keeping a rental out for an extended period of time, but who didn't want to feel forced into a sale either, he said.

No. 1 rental chain Blockbuster, Rogers' biggest competitor, experienced something of a fiasco in fine print when it launched its end-of-late-fees program last year.

Big Blue stopped charging late fees, but instead automatically charged renters' credit cards after a week of keeping a title. Blockbuster issued refunds minus a “restocking fee” for customers who balked at the forced purchase. Blockbuster franchisee locations were not under obligations to adhere to the much-advertised end of late fees.

Several lawsuits ensued, slamming the chain for misleading advertising. Blockbuster changed its ad message to better explain its no-late-fee program.

Rogers watched, learned and chose a different route.

“The vast majority of our customers don't want to be penalized for keeping [a title] an extra day, and we are quite content not to penalize them for that,” van der Lee said.

Rogers will even exchange packaging for renters who wind up purchasing a title, replacing the rental box with the sellthrough one.

Rogers also will continue to offer its return incentive program called FastBack Payback, which gives customers $1 off their next rental for returning select movies the next day.

“We feel like we owe it to our customers to try to provide them what they are most looking for in home entertainment, and we want to reward behavior that results in them bringing back a title early,” van der Lee said.

The rental market in North America has declined, though Rogers has been able to maintain its percentage of the existing pie, van der Lee said.

Changes such as ending late fees are part of a strategy to try to grow the business again, he said.

Rental is still a great low-priced, low-risk option for movie lovers, van der Lee said. And though new technologies are on the horizon it will remain so, he said.

“We believe in this business,” he said. “It's a great industry. It's an outstanding industry, including rental. It has many, many years left, it really does as long as we are tuned in to the customer.”

Rogers is in a unique market position as part of one of Canada's largest telecommunications companies, Rogers Communications.

Rogers is set up to take part of the forthcoming era of digital distribution. It's not farfetched to imagine a day when a typical Rogers video store customer can also be a digital download customer on the Rogers Web site, van der Lee said.

It doesn't make sense to try to wish the digital evolution away, he said.

“We have a vested interest in making that work too, but I don't think anytime soon digital — whether it is renting or buying over the Internet is going to seriously impact this business,” he said. “I do think there's an opportunity for incremental sales, there's a real opportunity to grow that business.”

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