NetFlix is Ripping Off Honest Customers

Rachel and I are very casual Netflix users. We have the cheapest plan, that gives us one movie at a time, up to two per month for five bucks a month. We’re not huge movie watchers, so this is perfect. Lets us see some new movies once in a while, very affordable, etc., etc.

A few months ago, we received “The DaVinci Code” in the mail from NetFlix. Shortly thereafter, we lost the DVD. We can’t find it anywhere, and we’ve looked. Either one of our small housebears children ate it or hid it expertly somewhere, or, more likely, it accidentally got thrown in the recycle with a pile of junk mail, magazines, and catalogs. Oops.

NetFlix won’t send us the next movie in our queue until we return this one. On the NetFlix site, there is the option to Report a Problem with a disc, including an option that only an assiduously honest person would choose:


“OK,” I think. “We’ll just have to bite the bullet.” I click the link, to find out how much they’re going make us pay:


Twenty bucks! For a DVD that came in a paper envelope!? That sucks, but what other choices do I have?

Let’s think about that question for a minute. On the previous page, I had noticed that they had “The DaVinci Code” for sale. “Only $5.99!”


That’s a lot cheaper than $20. What do you get for your $5.99?


A full plastic case with original artwork, AND the bonus disc, just like you’d get from a retail store? That’s a great deal. But that’s where I start thinking.

If I were a less than honest person (I’m not), what could I do to avoid paying $20 for a disc that I lost? What would my options be?


I could choose either of those first two options, say I never received the disc, or that I sent it back and it got lost in the mail. Completely dishonest, but NetFlix probably just figures on this happening sometimes, and takes the loss. I get my next movie, life goes on (except for that nagging, heavy, burning guilt that attaches itself to my conscience).

If I wanted to try to assuage my guilt, maybe I’d choose to buy the $5.99 version of the movie, and then, after it arrives, choose the last option there, “I don’t have the little white envelope to return the disc”. Let them send me a new envelope or whatever they do, return the $5.99 copy of the disc, and again, life goes on. With less guilt, but still an uneasy feeling that something isn’t right.

That’s what led me to wonder, “why on earth would Netflix punish ONLY honest customers with a $20 lost disc fee? Why not let them pay $5.99, a price they’re obviously comfortable charging other people?” Think about it – the only people who are going to pay that $20 fee are the people whose scruples won’t let them pick one of the other possibilities that I’ve described after only a few minutes thought. Who knows how elaborate you could get if you decided to become a dedicated NetFlix scammer…

It would be nice if NetFlix offered a limited amount of forgiveness for lost discs. Maybe one “get off free” chance per customer. Heck, why couldn’t they just say something like “Look, we know you lost a disc, but if you upgrade to a more expensive plan, we’ll forgive you just this once.” They get more revenue out of the deal, and I go away not feeling like I’ve been treated like crap.

So what are we going to do? We’re going to pay the $20 lost disc fee. And I’m going to harbor this bad feeling toward NetFlix for a while, this feeling that I’ve been mistreated, and taken advantage of. And now I’ve blogged about it, so maybe some other people will read about how NetFlix treats their customers. Maybe 10. Maybe millions. Maybe I’ll cancel my NetFlix account. Maybe other people will, too.

The moral of the story? Don’t treat your honest customers like cheating scum, while letting everyone else have a sweet deal.


17 thoughts on “NetFlix is Ripping Off Honest Customers

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  4. Matt Groener says:

    (in a perfect world)…
    The simple choice is to order the $5.99 movie, simultaneously order the “lost the envelope”, when they both arrive, you send them back the movie you just bought. You’re out $6 plus the time it took to get there (cause you can’t order more movies until then), and you watch a movie you already own in penance for losing it. You save $14 for the time spent waiting, which seems completely ok with me.

    I realize of course this won’t work because the movie you receive won’t have a barcode etc on it, and Netflix won’t know what to do with it. Sounds like you need to get “Consumerist” on them and call and plead for mercy/sanity.

  5. or you could be a Blockbuster customer and pay more than anyone else and then suddenly get an email around Christmas time that says that my subscription is going up in price in just a few days.

  6. Matthew Ernest says:

    Strictly speaking, this is the MPAA ripping off honest customers using Netflix as their agent. Rental requires separate (i.e. more expensive) licensing that does not come with a consumer end-user “purchase”. Since Netflix has all of these nice electronic records of everyone’s rentals, they’re probably exposed to MPAA auditing of how many rental licenses versus how many rental actually occur. The $20 charge reflects the higher replacement cost for a disc with rental licensing. I have no data, but I suspect the actual replacement cost is even higher but is amortized as a slight unit reduction in the much larger pool and so doesn’t need every unit replaced.

    The $5.99 for the used purchase reflects Netflix surrendering rental licensing for a copy that is presumably surplus anyway and thereby having a larger chance of being shelved rather than sent out again immediately.

  7. @Matt G. – yeah, I could do that, but there’s the barcode thing, and the conscience thing. 😉

    @Spencer – That would suck worse. Blockbuster must care less about their customers than Netflix does.

    @Matt E. – I’d be happy to blame this on the MPAA. They’re thugs and scum, at the same time. This is just another example.

  8. I would assume the $20 dollars is to cover the replacement cost of a new dvd versus the $5.99 price being the cost of a used dvd.

    I don’t think there is anything wrong with purchasing a replacement disk if you can find it cheaper somewhere else and then having netflix send you a new envelope. To me this is good money management and both parties get what they are needing.

    Also, I know for my netflix subscription that the bar code is just on the white sleeve and not on the disk itself.

  9. Not that I agree with it, but I think the difference in price is because you would be paying for a new replacement disc and overhead, while the $5.99 is for a used disc of a movie where rentals have tapered off. Sounds more like two systems that need to be connected a lot better than anything nefarious. For a good customer they should be able to just charge you for one of their “overstock” and call it done.

    Either way, I wouldn’t feel bad about buying the $5.99 version and turning it back in. You’re responsible for returning a disc to NetFlix, and I don’t see anything remotely wrong as long as they get a disc back of at least the same quality as the one they gave you.

    Of course, you know you’re going to find that original disc as soon as you send in the replacement anyway. Surrender to your fate! 🙂

  10. Rebecca says:

    Here is a novel idea. Just pay the fee. You DID lose, misplace it, whatever. Maybe in the future, you might want to read the fine print on NetFlix. And keep track of your movies better.

  11. Hmm. I haven’t been a Netflix customer in a year or more, but IIRC I had once lost a DVD and selected that option, and they did NOT bill me for the replacement cost of the DVD. I was on their $20/month option.

    Makes me wonder if you’re being “punished” for being on the cheapo plan..

  12. Fabian says:

    Josh, did you call netflix customer help line? I think they may help you more than we can as I have hear they have pretty good customer service.

  13. Sam says:

    Sometimes doing the right thing costs more. Actually, it almost always does, otherwise everyone would do it.

    I don’t think Netflix is ripping you off, they’re just trying to avoid getting ripped off themselves. If they were set up to check with the sales database to put a price on used discs they probably would just charge you that amount.

    So buy the used one, tell them you lost the sleeve and send it back. They’ll be happy, you’ll get off cheaply and it is at most a teeny-tiny ethical lapse that no one will fault you for since its fair to all parties.

  14. Sarah says:

    I don’t think Netflix is ripping you off at all. I actually had a similar situation – called netflix, call was answered in less than 2 seconds and they stated i could either pay replacement fee of $20, or purchase elsewhere (or in your case, on the previously viewed section for 5.99) and return that instead.

  15. Thanks for posting this. I have the 3-at-a-time Netflix plan and always wondered what would happen if I lost one. Now I know. BTW…I would have no trouble at all purchasing a cheaper replacement one and sending that one instead. I just can’t see the moral issue with that option at all 🙂

  16. Okijan2004 says:

    Im a very honest person, but I would have order the netflix dvd with full art hard cover and asked for a replacement envelope to send it to them.  They are still making money off of you if they can sell the dvd hard cover for 5.99.  But at no time should you allow them to fless you.  The have done enough of that buy raising priced this year without telling us.  My 7.99 + tax is now 9.99 + tax.  All without me upgrading or them informing me of the new charges.  Then to top it off the netflix web site claims the new charges wont take effect until 12 oct.  But my sept bill already reflext the 16.xx charge.  I have now dropped the mailing (quicksilver, isnt that a surf board comp?), and now Im once again back to the 7.99 + tax fee.  We will see how long I stay with netflix.  There are a lot of other places that stream videos…..

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