PORTLAND, Ore. (AP) -Blockbuster Inc. has agreed to make refunds to customers – and pay an additional $630,000 – to settle allegations the nation’s biggest movie rental chain deceived people with its “No Late Fees” campaign.

The agreement was announced Tuesday between Blockbuster and 47 states and the District of Columbia. The states that were not part of the settlement are New Jersey, which is pursuing a separate lawsuit, Vermont and New Hampshire.

Many customers were angry to discover that despite the “No Late Fees” policy, if they were eight days late with a movie or a game, they owned it; their credit card accounts were automatically billed for the purchase price. If they then tried to return it, they were refunded the purchase price but were charged a $1.25 restocking fee.

Under the settlement, Dallas-based Blockbuster must make refunds to customers who claim the campaign misled them into thinking they could keep the video or DVD for as long as they liked.

Also, Blockbuster agreed to pay the states about $630,000 to reimburse them for the costs of their investigations into consumer complaints.

In addition, the rental chain will have change its advertising to ease any confusion.

Blockbuster spokesman Randy Hargrove said that the cost of refunding the consumers is expected to be small, because fewer than 4 percent of Blockbuster customers kept the video or DVD beyond the seven-day window. Customers who feel they were misled must fill out a form available at Blockbuster stores.

Blockbuster spokeswoman Karen Raskopf said that the “no late fees” program will continue but that signs will be added to stores to better explain the fine print.

“We think our original communications were very clear, but we’re happy to do whatever we can to add additional communication to better inform our customers,” she said.

Blockbuster launched the no-late-fees program at its 4,600 U.S. stores on Jan. 1.

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