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1/13/2006

FTC Concerned About Netflix Settlement

The Federal Trade Commission (www.ftc.gov) 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 http://ftc.gov/opa/2006/01/fyi0602.htm.

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

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

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