FTC Recognizes Netflix Settlement Is Really Just A Promotional Gimmick
from the do-they-read-Techdirt? dept
Back in November, we mocked the “settlement” that Netflix had agreed to in a class action suit concerning misleading advertising (though we also questioned just how “injured” anyone was by Netflix’s original actions). The problem with the settlement went beyond the fact that the lawyers basically racked up most of the cash that Netflix paid out — we’ve pretty much come to expect that. The real problem was that the settlement for customers was basically a marketing promotion, rather than any punishment, and was likely to pay off for Netflix rather handsomely in the long run. That’s because the settlement meant Netflix customers would receive a “free” one month upgrade (or reinstated account if they had left), but at the end of the month, if they didn’t proactively decline to keep the upgrade they would automatically be kept at that level and have to pay the higher fee. It would appear that the folks at the FTC aren’t just going around and rubber stamping these deals as they saw the same thing we did (as did a number of others who set up websites to complain). The FTC has now asked the judge to reject the settlement, which they say: “appears dangerously close to being a promotional gimmick.” As we said in the original post, if this settlement is allowed to stand, it opens up a great new line of business for some lawyers. Set up random class action lawsuits for some wrong that may have been done by customers and then quickly “settle” it for a few million (seen as an advertising cost by the “guilty” company) and force all their users into unexpected upgrades that many will fail to manually downgrade. It’s the sort of thing that would pay for itself almost instantly.