Caution advised over pre-pay video scheme

Video giant Blockbuster is urging members to pre-pay up to $1,000 for rentals, sparking fears they would lose their money if the company collapses in a repeat of the KPS fiasco.

The 19-store chain began promoting its 'video passport' scheme yesterday, which gives customers a free rental or 10 per cent discount coupon for every $100 they deposit with the company.

Blockbuster says members can get a refund at any time and that the $1,000 limit protects depositors. But the Consumer Council warns that anyone pre-paying is exposed to the same risks as those caught short when the KPS rental chain folded.

KPS collapsed in November 1998, leaving thousands of customers with pre-paid video rental vouchers worth about $170 million.

The Maria's Bakery chain folded months before, with more than $300 million worth of cake vouchers still in circulation. Blockbuster, a US-based multinational, bought KPS' assets.

Blockbuster Hong Kong director of marketing Michael Wong Ho-ming said the passport system, under which the company keeps a record of a member's balance, was launched after requests from customers. 'They wanted a convenient way of renting videos and in the past, the entire video system was run on a coupon system,' he said.

'We started off with purely cash transactions but a lot of our members were asking for a similar system.'