• by Wendy Davis  @wendyndavis, April 26, 2012

Blockbuster has agreed to settle a class-action lawsuit accusing it of violating federal video privacy laws by retaining information about consumers' movie rentals, court records show.

Blockbuster and the consumer who sued, Minnesota resident Baseem Missaghi, quietly filed papers earlier this month stating that they had "agreed on the principal terms" of a settlement.

Blockbuster and Missaghi said in the papers that they were still finalizing the deal, but expect to file the agreement with the U.S. District Court in Minnesota by early June.

If the settlement goes through, it will resolve a lawsuit dating to last September, when Missaghi alleged that Blockbuster unlawfully kept "a virtual digital dossier on millions of consumers nationwide."

He alleged that Blockbuster's records "contain not only its customers' credit card numbers and billing/contact information, but also a highly detailed account of their video viewing histories and preferences."

Missaghi argued that the data retention violates the Video Privacy Protection Act, a law passed in 1988 after a newspaper in Washington printed the video rental records of Supreme Court nominee Robert Bork. The law prohibits movie rental services from disclosing information about the movies people watch without their consent.

The act also requires movie rental companies to destroy personally identifiable information
as soon as it is no longer needed.

Blockbuster isn't the only company that was accused recently of violating the Video Privacy Protection Act. Netflix, Hulu and Redbox all have been sued for allegedly violating the same law.

Netflix agreed to a $9 million settlement of the matter in February, though the details still haven't been made public.

But Hulu and Redbox are fighting the cases. Redbox recently convinced the 7th Circuit Court of Appeals that consumers have no right to sue for violations of the portion of the video privacy law that deals with retaining records, as opposed to disclosing them. But the lawsuit against Redbox is continuing because the consumers who are suing also allege that the company broke other laws.

The lawsuit against online video company Hulu accuses it of working with the analytics company KISSmetrics, which allegedly used "supercookies" to track people. Hulu is arguing that the federal video privacy law only applies to brick-and-mortar rental stores.

Blockbuster previously was sued for allegedly violating the same law by participating in Facebook's defunct Beacon program, which told users about their friends' activity at ecommerce sites.

That lawsuit eventually got rolled into the Beacon class-action litigation, which Facebook agreed to settle for $9.5 million.