The class action suit, filed in San Francisco on Sept. 24, 2004, by Frank Chavez, alleges that Netflix failed to provide one-day delivery and unlimited DVD rentals, as promised in marketing materials. The company notified its members of the proposed settlement in an e-mail Wednesday and denied any wrongdoing or liability.
Under the settlement, current Netflix subscribers who joined prior to Jan. 15, 2005, are entitled to a free, one-month upgrade in their service plans. For instance, subscribers with plans that allow for three DVDs at a time would be able to get four. Subscribers who joined prior to Jan. 15 and canceled before Oct. 19 are eligible for a free, one-month membership.
But if members aren't careful, they may end up paying for the upgrades. After a month of free benefits, the company will begin charging subscribers regular rates for the upgraded or renewed services, unless they proactively cancel or modify their plans.
Netflix, based in Los Gatos, Calif., has agreed to pay Chavez $2,000 in addition to $2.5 million for his attorneys' fees. More details on the settlement terms can be found on the Netflix Web site.