Movie Gallery Wants You To Buy Insurance For Their Defective Products
July 21st, 2006 Davis Posted in DVDs, Disclosure - I own stock in co. mentioned, Netflix, Uncategorized |
I’ve seen a lot of interesting ways for companies to make money, but my jaw just about hit the floor when I read a complaint on the Consumerist this morning that said Hollywood Video has begun implementing a .25 insurance charge against defective DVDs that won’t play. What blows my mind here is that if I go to just about any business in the US and buy a product and it ends up not working, you can always take it back and exchange it. Even at Blockbuster Video, they’ll give you another copy of the movie if you get a damaged disc. Does this mean that if you don’t pay their .25 tax that they won’t give you a refund on defective products they sell you? The whole policy sounds pretty funny money to me.
In looking through my Netflix history, I’ve had a damaged disc rate of about 3%. Now I rent a lot of movies, so this means that every couple of months I’ll hit a dud. When I do, I tell Netflix, they immedietely send out another disc and while annoying, I get to watch my movie with minimal effort on my part. I don’t know Hollywood Video’s damaged rate, but if you assume a 3% rate and you pay $3 a rental, then insurance would theorhetically break even around .09 a disc. For a customer to breakeven paying .25 per disc, they would need to experience a failure rate of over 8%, which if that’s the case, I’m not sure I’d be renting from Hollywood Video to begin with.
In all fairness to Movie Gallery, they are donating the proceeds from this scheme to charity, but that doesn’t mean their decision to not accept exchanges is right and the Consumerist rightly points out that Movie Gallery does receive the tax benefit of the donation (or at least they would if they made profits) This whole program sounds like another stupid tax to take money out of the pockets of hard working consumers and Hollywood Video should come up with a better way to deal with their defective products then making customers buy insurance. I’d rather see them raise prices by .25 and have the same return policies that most businesses have, then to resort to these types of shady tactics to help boost their revenues.
July 21st, 2006 at 7:44 pm
Then don’t purchase it.
This is a very common practice by companies (esp video rental) of charging DAMAGE PROTECTION (not “insurance”, as that is regulated by the government, nor is it a “tax”, as that is what is collected by the government), but rather a voluntary purchase to protect you from paying for a DVD that is damaged IN YOUR POSSESSION!!! IE, if it doesn’t work when you get it, you just take it back and tell them about it. However, if you have kids that like to break things or play frisbee with the discs, or a dog that likes to chew things, or are pretty much an airhead that drives off with stuff on top of the car (I have seen this more than a few times), this MIGHT be a good idea for you.
And, yes, it is incredibly profitable, but so are the “Protection plans” sold by Best Buy, Sams Club, etc. And Best Buy, especially, gives you the hard sell. If you don’t want to buy this protection, when the clerk ASKS you (no hard sell… if you are given a hard sell, it is being done wrong, and you should talk to the store manager), simply say “no”. It’s not that difficult, your parents should have said “no” to you a LOT growing up (although their not doing so would explain the “entitlement” attitude you are showing here), and that has been the basis of the drug control policy in the US for a generation. If just saying no is good enough for Nancy Reagan, it should help you get thru the check out process at your local video store.
And you want to complain about a company making a profit on selling your so-called “insurance”, why not start with Best Buy, which gives you a hard-sell, or better yet, attack State Farm, which really does make a profit selling insurance. HOW DARE THEY!!!!
Just furtuer proof that a little knowledge is a dangerous thing.
January 8th, 2007 at 3:32 pm
“Movie Gallery Wants You To Buy Insurance For Their Defective Products”
Umm…no actually the insurance is in case anything happens to the disc while it is in YOUR posession. Do your research before slamming a company………
January 8th, 2007 at 4:47 pm
Trevor - If you’ll note the date of this post, you’ll notice that this was written way before any details about the program were publically available, so research wasn’t really something one could do a lot of. Having said that though, it’s problematic to say that the insurance is only for when it’s in your possession because many times, you don’t know if a disc is bad until you take it home. If I rent a bad disc and then take it back, how is Movie Gallery to know whether or not it became defective in my possession or if it was a bum disc to begin wiht? If the insurance only applies to discs that the dog chews up and are obviously destroyed, then I question the ethics of how this program is being marketed. On the other hand, if Movie Gallery doesn’t allow people to take scratched discs back, then there is a real issue here for customers who get defective products to begin with. I’ve had plenty of times where a movie would skip midway through the film, is Movie Gallery going to watch every DVD completely through before renting to customers? I doubt it. My fear is that customers are buying the insurance because they believe they might be at risk if it turns out defective and something doesn’t sit right about that. I have a funny feeling that if customers knew that this was only for completely obliterated discs, then they’d be much less likely to purchase the insurance. In all of my years of renting, I’ve never destroyed a movie, but plenty have had scratches. I’m sorry if you feel like I’m slamming your company, but it’s hard to see the justification for the policy.
July 18th, 2007 at 4:16 pm
It clearly states on everything I’ve seen in the Hollywood Video stores in my area that it is a damage waiver - not insurance. It’s not insuring the disc against working or not (there can be software and firmware issues not related to scratches that could cause that). It’s a damage waiver - waiving your responsibility against damages that you will cause on the disc. That could be dropping it in the toilet, running it over with your car, the kids tearing it up, etc. My local store has always taken back anything that skips - that’s the nature of DVD. This is just like a damage waiver on a rental car - Enterprise is going to let the normal wear and tear go but not the big dents, etc.
November 13th, 2007 at 7:14 pm
My dog DID chew through a disk, and THAT .25 cents saved me 20$
I am glad someone looks out for their customers!
January 4th, 2008 at 11:02 pm
I seem to be having trackback issues with this template, but Melanie has some good commentary on this issue on her Daily Guilt Blog.
http://www.dailyguilt.com/2007/03/29/why-girls-shouldnt-rent-video-games/
Understandably, she also doesn’t see much value in buying insurance for rentals.
July 14th, 2008 at 6:40 pm
This is a WAY old post, but I’m just coming across it now. I work for Movie Gallery as a store manager in Minnesota. The .25 “damage waiver” is called Playguard. It simply protects you from having to buy a disc should it come back scratched, damaged, or broken in any way. We do check EVERY movie before we check it in from the previous renter, so we know how it goes out. It is in no way a “Scam”. We are simply trying to help out our customers. I have loyal customers who buy it every visit. They do not want to take the risk that their kid or dog is going to ruin it, or that even themselves will not.