In a blow to its reputation, Blockbuster Inc. yesterday agreed to make customer refunds and rework its advertising to settle charges that it duped the public with its heavily promoted "The End Of Late Fees" campaign.

The nation's leading movie rental chain also will pay $630,000 to 47 states and the District of Columbia for costs of the investigation. Pennsylvania's share is $23,100.

"The 'end of late fees' promotion was understood by consumers to mean just that," Pennsylvania Attorney General Tom Corbett said yesterday.

In reality, the program meant "you try it, you buy it," said Corbett, whose office was one of six leading state agencies to negotiate the settlement.

Under the program, launched at Blockbuster's 4,600 stores Jan. 1, customers who failed to return rentals after the seven-day grace period were automatically charged for the purchase price, typically $19.95. If the customer returned the movie undamaged within 30 days, the sale was converted to a $1.25 restocking fee.

That was shocking news to many consumers, who believed the policy meant they could keep videos and DVDs for as long as they liked without incurring a fee, state investigators alleged. They accused Blockbuster of not adequately revealing the terms of the program in its stores or ads.

Dallas-based Blockbuster admitted no wrongdoing, but agreed to more clearly disclose terms of the promotion throughout its stores, on its Web site and in ads and promotional mailings.

"We think our original communications were very clear, but we're happy to do whatever we can to add additional communication to better inform our customers," spokeswoman Karen Raskopf said.

Customers who feel they were mislead and were hit with purchase or restocking fees can claim refunds by filing out a complaint form and returning undamaged videos or DVDs before April 28. Forms are available at stores or at www.attorneygeneral.gov.

Blockbuster said it expected refund costs to be small because fewer than 4 percent of customers kept rentals beyond the seven-day window.

States that were not part of the settlement are New Jersey, which is pursuing a separate lawsuit, Vermont and New Hampshire.