Originally published February 26 2006
Netflix criticized for treating customers differently
by Mike Adams, the Health Ranger, NaturalNews Editor
Netflix's automated system identifies the heavy renters and delays their shipments to protect its profits, according to a recent Wired.com article. This little-known tactic (called throttling) means customers pay the same price for the same service but are treated differently.
Manuel Villanueva realizes he has been getting a pretty good deal since he signed up for Netflix's online DVD rental service 2 1/2 years ago, but he still feels shortchanged.
That's because the $17.99 monthly fee that he pays to rent up to three DVDs at a time would amount to an even bigger bargain if the company didn't penalize him for returning his movies so quickly.
Netflix typically sends about 13 movies per month to Villanueva's home in Warren, Michigan -- down from the 18 to 22 DVDs he once received before the company's automated system identified him as a heavy renter and began delaying his shipments to protect its profits.
The same Netflix formula also shoves Villanueva to the back of the line for the most-wanted DVDs, so the service can send those popular flicks to new subscribers and infrequent renters.
The little-known practice, called "throttling" by critics, means Netflix customers who pay the same price for the same service are often treated differently, depending on their rental patterns.
Los Gatos, California-based Netflix didn't publicly acknowledge it differentiates among customers until revising its "terms of use" in January 2005 -- four months after a San Francisco subscriber filed a class-action lawsuit alleging that the company had deceptively promised one-day delivery of most DVDs.
"In determining priority for shipping and inventory allocation, we give priority to those members who receive the fewest DVDs through our service," Netflix's revised policy now reads.
Few customers have complained about this "fairness algorithm," according to Netflix CEO Reed Hastings.
After collecting consumer opinions about the web's 40 largest retailers last year, Ann Arbor, Michigan, research firm ForeSeeResults rated Netflix as "the cream of the crop in customer satisfaction."
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