Columbia House operates a music and DVD club, and as such is a direct seller of DVD movies and box sets, offering its selections through “club membership” agreements.

Terms of Membership Agreement
The company offers new members CDs and DVDs below cost to join (5 DVDs for US$5 with free shipping), while the customer agrees to buy a few more at 'regular club price'. The 'regular club price' is not published in the advertisement contract (The cheapest DVDs are US$19.95 plus shipping, others cost even more). The customer only learns the price after they have joined. Furthermore, club members will automatically receive a DVD (known as Director's Choice) and be required to pay for it plus postage every 3 weeks unless they send back a card declining the selection (21 times a year).


“Fun Cash” and “Dividend Dollars”
Columbia House offers a point system, where movies bought result in “points” or “Fun Cash” (“Dividend Dollars” was the term used when the movies came in VHS format, which is no longer the case). Fun Cash does not transfer from one subscription to another. There are a number of restrictions to the use of Fun Cash, which generally make regular re-enrollment a lower cost and more tangible option for those interested in savings.


Columbia House security breach
In 2001, a security breach in the Columbia House website exposed thousands of customer names, addresses and portions of credit card numbers—leaving private information about customers vulnerable to exploit.The issue involved a particular section of the website, which could easily be accessed by deleting a portion of the website address in the address bar, discovered by customer Mark Alway. Upon the discovery of the breach, he emailed the Columbia House staff who were quick to respond to the problem. This event has naturally given rise to concerns over the website's capability of keeping private information safe and secure from hackers or devastating scams. Although no information was reportedly obtained from the temporary breach according to Columbia House, industry professionals were quick to point out that the simple error was the consequence of negligent behavior towards an issue as important as customer information.