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Columbia House operates a music and DVD club, and as such is a direct seller of DVD movies and box sets, offering its selections through “club membership” agreements.

Membership

Membership constitutes an agreement whereby the customer agrees to purchase a minimum number of movies at regular list price. To join, or enter a legal obligation, the customer agrees to purchase one discounted movie at the beginning, which is sent out as part of a "welcome package". Over the term of the agreement the minimum number of list price movies must be bought. 21 times per year, the company informs each customer of the "Director's Selection" movie. The customer is asked to respond within 10 days whether or not he or she wants to buy this movie, which is offered at a discount provided that the response is received by Columbia House within the specified time. Failure to respond results in having that movie shipped at full list price. If the customer responds negatively but in time, the idea is that the movie is not sent or charged to the customer's account. Director's Selection movie purchases do not deplete the obligation to purchase 4 list price movies during the term of the agreement, regardless of the price paid for any Director's Selection movie. In specified circumstances, "memberships" are available, whereby the customer is not required to respond to Director Selection mailings unless he or she wants to buy the movie. When such memberships expire, the old rules return where a response is required in time to prevent shipping of full price movies without customer input. Customers are not reminded when those rules change. The customer also has access to a large variety of other movies, which are advertised by mail and online towards the customer. Only full price purchases deplete that minimum purchase obligation. Purchases are not cumulative, meaning that two movies bought at ten dollars each do not deplete the minimum list price movie purchases by one movie. If the minimum number of movies has not been purchased by the end of the term, the monetary worth of those movies is charged to the customers' accounts. If any purchases have been made using Columbia House's point of sale device, either credit cards or debit cards linked to credit card accounts, then those accounts are automatically debited without further notice to the customer. Likewise, backordered movies are automatically debited to those accounts when they become available, without further notification to the customers. Failure to clear such purchases result in collections efforts by Columbia House against the customers.

“Fun Cash” and “Dividend Dollars”

Columbia House offers a point system, where movies bought result in “points” or “Fun Cash” (“Dividend Dollars” was the term used when the movies came in VHS format, which is no longer the case). Fun Cash does not transfer from one subscription to another. There are a number of restrictions to the use of Fun Cash, which generally make regular re-enrollment a lower cost and more tangible option for those interested in savings.

Security breach

In 2001, a security breach in the Columbia House website exposed thousands of customer names, addresses and portions of credit card numbers, so leaving private information about customers vulnerable to exploitation.[146284] The issue involved a particular section of the website, which could easily be accessed by deleting a portion of the website address in the address bar, discovered by customer Mark Alway. Upon the discovery of the breach, he emailed the Columbia House staff who were quick to respond to the problem. This event has naturally given rise to concerns over the website's capability of keeping private information safe and secure from hackers or devastating scams. Although no information was reportedly obtained from the temporary breach according to Columbia House, industry professionals were quick to point out that the simple error was the consequence of negligent handling of customer information.

Other clubs

Columbia House has made forays into other media besides music and movies. For a few years, Columbia House offered a CD-ROM club, allowing customers to buy computer games. It is now allowing members to buy video games from its site, but thus far has not offered a specific club for this. One can also enter into agreements concerning the regular purchase of "box sets", which are compilations of popular TV series. One agreement, allows customers access to any of Columbia House's products. Everything can be sourced via the company website.

References in popular culture

  • "Weird Al" Yankovic, in the song Albuquerque, implies that joining the Columbia Record Club is a much larger commitment than getting married or having children. The character in the song, not ready to make this commitment, divorces the woman of his dreams and never sees her again.
  • In the Coen brothers film A Serious Man, the protagonist Larry Gopnik is forced to deal with dunning calls after his son joins the Columbia Record Club.


BMG takeover

The company was founded in 1955 and originally called the Columbia Record Club and was originally owned by CBS Records (not to be confused with the 2006-founded record label of the same name). For many years, it competed with the rival RCA Music Service operated by RCA Records; CBS recordings were not available from the RCA club, and RCA recordings were unavailable through Columbia House. Sony acquired Columbia House in 1987 when they bought CBS Records; the same year, RCA was acquired by Bertelsmann Music Group, and its music club was renamed BMG Music Service. Columbia House became a joint venture of Sony and Time Warner in 1991, adding Time-Life's music clubs.[146285] Today, Sony BMG Direct owns both Columbia House and BMG Music Service, and runs them as a single service.

Beginning in May, BMG Columbia House plants in Terre Hautemarker, Indianapolismarker and South Carolinamarker are scheduled to be closed, and all employees are expected to be released.

Private Ownership

In 2008, the Najafi Group acquired Columbia House and its associated Book, DVD and Music clubs from Bertelsmann.

Negative option billing practice

According to customer feedback , the Columbia House company employs negative option billing, a form of commercial distribution in which services are automatically supplied to the consumers until a specific cancellation order is issued. The Federal Trade Commission has published information to protect customers against this practice, specifically referencing a $0.49/video offering.

Better Business Bureau rating

BBB Rating = Unsatisfactory[146286][146287]Based on BBB files, this business has an unsatisfactory rating with the BBB due to a failure to respond to complaints. This company also has an unsatisfactory record due to a pattern of complaints. Specifically, complainants allege receiving merchandise and/or bills for merchandise from BMG/Columbia House for CDs and/or DVDs that they did not order. Complainants further allege that they did not join BMG/Columbia House and do not know how the company obtained their information and that the company's phone line & website do not provide live customer service representatives to help resolve these issues.

Fraudulent Sale of Debt

In December 2008, BMG Music Service (now yourmusic.com) sold an unknown number of fraudulent debt claims to a collection agency, National Credit Solutions. Supposed delinquents were not made known of their debt and most had not made purchases with the company for at least five years. Victims of the sale of false debt claims were not made known of either their debt or the account opened with National Credit Solutions. Most victims learned of the collections agency account when they were denied for a loan, had credit cards canceled, or checked their credit reports.

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