At first, managers of a group of Northern Virginia Blockbuster franchises loved the idea of dropping late fees -- until, that is, customers started complaining that the new policy had turned fellow renters into movie hogs. New releases such as "Batman Begins" would get snatched up early, and neither clerks nor impatient fans could predict when the movie would return to the shelves.
So earlier this month, Capitol Entertainment, which owns 17 franchises, decided to exercise its right to jettison the national policy that Dallas-based Blockbuster Inc. had introduced with great fanfare in January. It imposed a 99-cent daily late fee, much to the satisfaction of customers like Art Kingdom.
"People just scarfed up movies," said Kingdom, who rents from Capitol's franchise in Great Falls. "You could see people leaving Blockbuster with an armful of movies instead of just one or two."
Early on, he said, he tried to be a good neighbor, bringing back rentals promptly despite the demise of the late fee. But with little incentive to do so and the behavior of others to follow, he started to "pig out" like other customers, and they all suffered from less and less choice.
"With the no-late-fee policy we were having an extreme problem with satisfying the customer on movie availability," said Mickey McFarland, director of operations for Capitol Entertainment, which owns franchises in Arkansas, West Virginia, Maryland and Virginia, including nine in Fairfax County. "We did not know when the movies were coming back."
Under the no-late-fee policy, which a franchisee is not required to follow, customers are billed for the price of an item -- some cost $20 and more -- if it has not been returned within seven days of the due date. That cost is charged to a credit card, and if it is returned within 30 days after that, the money is refunded and a $1.25 restocking fee is charged.
The move came in response to competitors such as Netflix, which sends customers a constant supply of DVDs through the mail, and cable companies offering films on demand.
Problems quickly arose. By March, Blockbuster faced complaints from attorneys general across the country who said the program was misleading. Blockbuster agreed to pay 47 states and the District of Columbia $630,000 to cover investigative costs, though it conceded no wrongdoing.
Blockbuster has 4,700 corporate-owned locations across the country and approximately 1,100 franchises operated by independent owners such as Capitol Entertainment. All the corporate locations participate in the no-late-fee policy, but only about half of the franchisees now do so, said Blockbuster spokesman Randy Hargrove.
Hargrove said that the late-fee policy is a decision left to each franchise.
"Our franchisees are independent business people, and they have to do what is right for their business and their customers," he said.
Of the 54 franchises in Maryland and Virginia, 15 have decided to rebel against the no-late-fee policy: 13 franchises owned by Capitol Entertainment and two stores in Frederick and Thurmont owned by Golden Mile Entertainment. (The seven District stores are company-owned.)
Blockbuster said that the $250 million to $300 million generated by late fees will be made up by revenue coming from greater frequency of rentals. "The no-late-fee program has performed very well," said Hargrove. "We have said that by the first quarter of 2006, we believe that overall rental revenues will be greater than if we would have charged an extended viewing fee."
In September, Blockbuster said it would not be paying a dividend for the third quarter, and it cited increased competition and the suspension of late fees.
Kingdom said the savvy renters made sure to stop by in the middle of the week and snatch up popular rentals before the weekend. "It became frustrating to come in there and not find anything," he said.
Blockbuster acknowledges that the movies stay off the shelves a little longer. "We have seen that customers take the product out on average an extra day or two longer," said Hargrove.
Managers of corporate-owned stores said that they have not heard much customer complaint and that their customers are returning movies on time.
"It's not really a big problem," said Jon Stevens, a manager of a corporate-owned Blockbuster on Braddock Road in Fairfax.
McFarland said that his customers have embraced the late-fee policy once again. "Evidently it might be working for corporate Blockbuster, but from our customers we were getting complaints," said McFarland.