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Netflix Is Raising Rates And Getting Sued

By Nick Younker
Published on: 11:14 PST, Jul 1, 2016

Netflix has been on roll lately, raising rates for subscribers who had been previously locked in at the grandfathered rate of $7.99 a month. But one Netflix subscriber in particular is not going to take it lying down, and he is starting a class-action lawsuit against the video-streaming giant.

The basic premise behind this action is that Netflix ran ads promising their potential subscribers that if they signed up at that time, their rate would be locked in for the entire lifetime of the subscription, as long as that customer maintained his/her subscription to Netflix the whole time, according to The Hollywood Reporter.

Netflix raised the rates for subscribers that signed up prior to two years ago, which came years after the original ads ran. But as time went by, those who had the original rate and maintained a subscription to the service kept paying the old rate of $7.99 a month. But now that two years has passed by, Netflix is looking to cash in on their older customers and do away with the old grandfathered rate.

Just last month, Netflix sent notice to its older customers that their grandfathered rates would now be changing. That means the old $7.99 a month rate that subscribers used to pay for their Netflix subscription is going away and the loyal customers that Netflix once had will now be getting charged the new rate of $9.99 a month.

The lawsuit alleges that Netflix has broken their original agreement that they promised so long ago to their loyal customers who have maintained a Netflix subscription and paid their monthly fees every month without ever leaving for one of their competitors, namely Amazon Prime and Hulu Plus.

“For a period of time, Netflix solicited persons to subscribe to Netflix’s streaming service by guaranteeing that Netflix would not increase monthly subscription prices as long as the subscribers maintained the subscription service continuously. Netflix has broken its contract with these subscribers by unilaterally raising monthly subscription prices,” the complaint in the lawsuit states.

This class-action lawsuit against Netflix is much bigger than anyone can truly imagine. The sheer amount of people that could be potentially affected by this lawsuit totals to around 22 million, and that is only in the United States. If people in other countries are having the same problem, then Netflix could have a real crisis on their hands and have to pay out a huge sum of money.

One subscriber, George Keritsis, says that he had used the ad that Netflix ran as his reason to join up with them. He went as far as to call Netflix to confirm that the ad was legitimate, and he was told it was and that he would have his $7.99 rate locked in for the duration of his subscription, so long as he never allowed it to lapse. He was also among the people who Netflix sent a notification to last month telling them that their “special pricing” was ending and they would now be charged $9.99 a month. But when he called Netflix to inquire about his lifetime rate that was locked in, he got a response that is not consistent with what he was told when he signed up.

“The Netflix representative stated that he could see Plaintiff’s account was ‘grandfathered in.’ Plaintiff protested that the price increase was inconsistent with the lifetime price guarantee. The Netflix representative stated that Netflix would raise prices for all grandfathered accounts, not just Plaintiff’s account,” the lawsuit complaint said.

The class-action lawsuit against Netflix is for breach of contract and seeks to involve everyone who has been affected by the situation, which totals to around 22 million people in the U.S.

[Photo by Stephen Shugerman/Getty Images for Netflix]

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