San Francisco, CA: (Apr-23-08) A class action lawsuit was brought against NetFlix, representing almost 697,000 class members, who alleged that the online movie rental company falsely advertised its services. The suit claimed that the company's advertisements of unlimited DVD rentals and one-day delivery for a flat monthly fee were false. The plaintiffs alleged that the faster customers watched and returned movies the slower the company was in sending the next ones. It further claimed that Netflix's goal was to limit monthly usage and keep its costs down.
As part of a settlement reached in the case, sources stated that Netflix agreed to a $7.3 million compensation to the class, as well as agreed to provide members with one month of free DVD rentals or service upgrades. Sources stated that as part of the settlement agreement, the company was required to change its advertising practices. A California appeals court has awarded $2 million in attorneys fees to the plaintiffs' lawyers. [
