David Hannum is still right!

David Hannum observed in connection with P.T. Barnum that "there is a sucker born every minute." There are, have been, and will continue to be, innumerable examples that corroborate his observation.

The latest verification of Hannum's theorum is Internet movie rental powerhouse, Netflix's settlement of a class action suit over "throttling" its customers.

Netflix, advertises that for a monthly membership fee of $17.99, you can rent as many movies as you want to each month. Such a deal! Of course under this business model, Netflix makes more money the less you actually request their DVD's.

So what Netflix didn't tell its customers until a recent settlement of a class action suit, is that if you actually take advantage of their offer to the point that a "fairness algorithm" in their computer determines that Netflix's profits are no longer maximized, they deliberately slow down deliveries of future DVDs. The actual code words to legitimize this which Netflix has now added to its Terms of Service is that they "give priority to those members who receive the fewest DVDs through our service."

Misleading advertising that lulls customers into thinking that they are getting more than is being delivered is certainly not new, for example Verizon Wireless has deliberately crippled all of the Bluetooth enabled phones that they sell in order to force customers to pay Verizon for extra features that the phone you are buying would otherwise provide free.

I guess what surprises me but shouldn't, is that companies are increasingly unrepentant when they are caught at this stuff because the customers keep coming anyway.

*** Update - In the "great minds think alike" tradition, Daniel Solove at Concurring Opinions has also posted here on the Netflix throttling policy.