Years ago, on the recommendation of my sister, I subscribed to the DVD rental service Netflix.

Netflix is an online catalog of popular movies from which you can select three movies at a time to be mailed to you for a monthly fee.

At the time I subscribed there was a "deal" going on that made the entire prospect quite attractive--except that they had no intention of honoring that deal. When I checked my Visa statement, I had been charged far more than agreed upon and when I called to straighten it out, I was told that I didn't "qualify" because I was wearing purple pants and ate broccolli the day I enrolled. My response was, "OK, you got me, but cancel my account."

Netflix apparently didn't need my business since they went on to become one of the online business success stories, with millions of renters all over the country and spawner of several imitators, yet the sleight-of-hand with their customer base apparently continues.

Netflix typically sends about 13 movies per month to Villanueva's home in Warren, Mich. — down from the 18 to 22 DVDs he once received before the company's automated system identified him as a heavy renter and began delaying his shipments to protect its profits.

The same Netflix formula also shoves Villanueva to the back of the line for the most-wanted DVDs, so the service can send those popular flicks to new subscribers and infrequent renters.

The little-known practice, called "throttling" by critics, means Netflix customers who pay the same price for the same service are often treated differently, depending on their rental patterns.

"I wouldn't have a problem with it if they didn't advertise `unlimited rentals,'" Villanueva said. "The fact is that they go out of their way to make sure you don't go over whatever secret limit they have set up for your account."

What drives me crazy about practices like this is that they are almost always counter-productive. As I said, Netflix has a good business model--they don't need to engage in petty theft, but they just can't resist taking the change from Mommy's purse.

Business is about relationships--every business I ever worked from, including my own, has prospered by clients have had good things to say about it to their friends and associates. I always ask new customers how they heard about my company, and well over half attribute word of mouth. Over five bucks or some such trivial amount, Netflix lost me as a long-term customer and insured that I would never have anything good to say about them.

Dumb.

Some might point out that Netflix has done quite well in spite of that, but what's done well can always be attributed to what they do right, and the reason they aren't even more successful is due to what they do wrong--every company succeeds on its virtues and fails on its flaws. The idiocy here is that the flaw is so petty, so easily remedied.

In the end, like so many of these stories, the blood you leak into the water draws sharks.

Without acknowledging wrongdoing, the company agreed to provide a one-month rental upgrade and pay Chavez's attorneys $2.5 million, but the settlement sparked protests that prompted the two sides to reconsider. A hearing on a revised settlement proposal is scheduled for Feb. 22 in San Francisco Superior Court.

The lawyer's pound of flesh amounts to nearly 10% of their operating profits last year. That's gotta hurt.