The Dark Side of Netflix

Netflix Underground is not affiliated with Netflix, Inc.


Exchange Netflix Mailers for Free Blockbuster DVD Rentals

Normally, Blockbuster is not mentioned on this site, but a current event demands that both companies be mentioned.

Until December 21, Blockbuster is giving a free in-store rental for each Netflix address flap you bring to a Blockbuster store. The part of the Netflix mailer that you normally throw away can now be used as a coupon for a free rental.

To take advantage of this offer, you will need to have or sign up for a free Blockbuster store membership. The free rentals are subject to normal rental terms.

Click here to learn the details.


Another Chance to Opt-Out of the Netflix Settlement

As expected, the Frank Chavez v. Netflix, Inc. settlement ( has been revised slightly to eliminate the previously proposed automatic billing element. This revision to the settlement terms gives you another opportunity to exclude yourself from the class and preserve your right to sue Netflix in a separate case.

Note that you may exclude yourself even if you had already joined the settlement class. If you wish to exclude yourself from the class, you must send a letter stating that you wish to opt-out of the settlement. The deadline is June 26, 2006.

For information on how to opt-out, see Page 6 Item B of the Notice of Amended Class Action Settlement. Follow the directions carefully or your request will be considered invalid.


Netflix Underground Atom/RSS Feed

The syndication (Atom/RSS) feed for Netflix Underground is


Netflix Sues Competitor over Business Model

Netflix is suing their major competitor over its business model. A major issue is whether Netflix owns the queue concept for selecting and distributing DVDs to subscribers.

The complaint was filed in the U.S. District Court in San Francisco and is likely to launch the biggest legal battle yet in the DVD-by-mail industry.

Associated Press:

Online DVD rental service Netflix Inc. on Tuesday accused Blockbuster Inc. of illegally copying its ideas in a patent infringement lawsuit challenging the video store chain's recent Internet expansion.

The complaint, filed in U.S. District Court in San Francisco, focuses largely on the online wish lists that prioritize the DVD desires of about 5.4 million people who subscribe to either Netflix or Blockbuster's Internet service.

Netflix also believes its patents cover perhaps its most popular feature -- the option of renting a DVD for an unlimited time without incurring late fees.

Read the full article here.
“Netflix Sues Blockbuster for Alleged Patent Infringement”


Netflix Gives in a Little on Settlement

On February 22, 2006, Netflix attorneys announced that Netflix would modify the previous Chavez vs. Netflix settlement agreement that promises a free month of service or account upgrade to some former and present Netflix subscribers.

Originally, the settlement terms required the subscribers to manually cancel subscriptions at the end of the free month or be billed automatically for each month thereafter. The new terms of the settlement require that the participants will be billed only if they specifically agree to continue their subscriptions prior to any billing.

The new terms of the settlement represent a substantial improvement, but the settlement is still pretty pathetic. Some subscribers were cheated out of several DVDs per month for many months. For example, what if Netflix throttled a $17.99 subscriber by 40% for a year? That is a loss of around $86. Imagine the subscribers on the big rental plans. Those people get throttled worse than anyone and may have throttling losses in the hundreds.

Netflix must have made some incredible profits on the backs of their subscribers. If this lawsuit settlement goes through, Netflix will be getting off very easily and the victimized subscribers will be getting only a meager benefit that is bound to lead to additional frustrations.

If you do not agree with the terms of the Netflix settlement and want to learn how to protest or opt-out, visit for more information.

Note: If you intend to sue Netflix, you must take the initiative to opt-out of this settlement, and you should consult an attorney as soon as possible.

Houston Chronicle Article
“Netflix Modifies Class-Action Settlement”


Associated Press Reports Netflix Throttling

An Associated Press article by Michael Liedtke addresses the issue of Netflix’s throttling. The article is about two years too late, but at least the writer does not gloss over the issue of throttling like virtually all mainstream journalists do when reporting on Netflix.

The article, “'Throttling' Angers Netflix Heavy Renters,” simply details what the rest of us have known since 2004. The ironic thing is that people proclaiming theories of Netflix throttling a year or two ago were called paranoid conspiracy theorists. Now, those wild conspiracy theories about Netflix are the facts of an Associated Press article.

Netflix made fools of their loyal supporters. Netflix told them throttling was a myth, they believed it, and embarrassed themselves by defending the company in front of friends and family.

Throttling existed all along, and Netflix hid the practice from the customers as long as they could get away with it. Finally, their business practices just got to be too much to hide, and Netflix quietly began coming clean.

Unfortunately, for Netflix, it may be too late. Many people have learned the truth the hard way and have warned others about Netflix. Netflix and throttling are two words that are now inexorably linked. Netflix’s reputation for deceiving customers will haunt the company for years.

You can read the Associated Press article at the following links.
“'Throttling' Angers Netflix Heavy Renters”
“Netflix Sends Frequent Renters to the Back of DVD Line”

Make sure to forward this post to anyone who called you a paranoid conspiracy theorist when you told him or her about Netflix’s dark side.


"How to Get Revenge on Netflix" Article Link

The article, "How to Get Revenge on Netflix," has been moved. Please click here for the permanent link.


Netflix Hires Former Postmaster General As COO

Netflix’s favorite scapegoat for slow DVD turnaround is the United States Postal Service. If you have ever asked Netflix Customer Service why it is taking so long for your DVDs to be checked in, a Netflix employee has probably implied to you that USPS is slow and incompetent and should be blamed for any delays.

Oddly, Netflix has hired, former U.S. Postmaster General, William J. Henderson as its new chief operations officer (COO). This brings up an interesting question. If USPS is so incompetent that they cannot transport DVDs in a timely and reliable manner, why would Netflix give one of its highest and most critical positions to a former USPS leader? Perhaps Netflix has more faith in USPS than they are willing to admit.

The fact is that USPS does have some problems, but getting mail delivered is not one of them. USPS handles mind-boggling volumes of mail each day, and an amazingly high percentage gets delivered to the intended destinations on time.

The reality is that William Henderson is now probably the most competent and ethical person in the Netflix organization. Congratulations, Netflix on making a wise addition to your staff. Now that you have a major USPS insider on the management team, please stop blaming USPS for delays.


FTC Concerned About Netflix Settlement

The Federal Trade Commission ( has concerns about the proposed Netflix settlement (Chavez vs. Netflix). The FTC’s concerns closely resemble the concerns voiced by the many former and present Netflix customers who are unhappy with the settlement.

Essentially, the FTC is concerned the proposed Netflix settlement is more of a promotional vehicle for Netflix that could end up having negative effects on the members of the class. The FTC also has concerns about Netflix not adequately informing class members about the fine points of the settlement.

Here is an excerpt from the FTC’s official statement.

…the FTC has two basic concerns with the Netflix settlement. First, the settlement would serve more as a promotional vehicle for Netflix, than a means of providing redress to consumers, and could leave some consumers in a worse position than if they had decided not to participate. Second, the notice to class members does not adequately inform them about the existence of the negative option and the settlement agreement, does not require disclosure of the terms of the negative option plan, and fails to specify how consumers can cancel once they are enrolled. Class members need this information to understand the cost they will incur if they do not cancel the free service or upgrade before the deadline and the steps they will need to take to cancel the service or upgrade and avoid future charges.

The Commission believes the settlement should be either rejected or restructured to correct the above deficiencies. The Commission vote authorizing the staff to file the brief was 4-0. (FTC File No. P024210; the staff contact is Carol J. Jennings, Bureau of Consumer Protection, 202-326-3010.)

You can read the entire FTC statement at

You can contact the FTC directly at the following numbers and addresses.

FTC Toll Free Help Line
1 (877) 382-4357 (FTC-HELP)

Online FTC Complaints
Complaint Form

FTC Bureau of Consumer Protection, Staff Contact
Carol J. Jennings (202) 326-3010

FTC Consumer Response Center
Room 130
600 Pennsylvania Avenue, N.W.
Washington, DC 20580