from Adweek: After settling false advertising claims in 47 states, Blockbuster is eliminating 20 percent of its headquarters staff to offset a $70 million increase in spending for its online operation, the company said.
The layoffs will affect between 200 and 300 employees, the company said.
A $630,000 settlement with 47 states’ attorneys general stems from Blockbuster’s “No More Late Fees” ad campaign created by independent Doner of Southfield, Mich., and launched in January. Doner was not faulted for its work in the campaign.
The states claimed that Blockbuster’s ads deceived customers into thinking they could keep the movies without a penalty. Instead, Blockbuster charged customers the purchase price of the movie if it was not returned within the grace period. When the movie was returned, its price was refunded on a customer’s credit card, but Blockbuster charged a $1.25 restocking fee.
Blockbuster agreed to refund fees charged to customers who did not understand the new policy and said it would clarify the policy in future communications. The company was allowed to continue running the “No More Late Fees” commercials.
As it announced the layoffs, Blockbuster also reported that it paid CEO John Antioco $51.6 million last year. That equaled the combined 2004 pay of Intel CEO Craig Barrett, General Electric Co. CEO Jeffrey Immelt and Gillette Co. CEO James Kilts, according to Bloomberg News.
