Despite what Hollywood Video would like you to believe, there’s very few CDs or DVDs that can’t actually be repaired to good as new. A good rule of thumb is that if you can hold a DVD up to the light and you can’t see light actually coming through the scratches and gouges, that DVD can be fixed.

Nevertheless, Hollywood Video would like you to believe that broken discs happen all the time, so they’re instituting a 25 cent insurance policy on every rental. That’s a bit ridiculous in and of itself — how many times do you really need to rent out a disc before you get a return on your $20 investment, oh massive corporation? — but Bob W. wrote us in explaining a more interesting take on the entire thing.

Bob’s theory? The insurance program is giving all proceeds to Starlight, a charity that gives kids games to play. And there’s the rub: you’re financing their tax deduction by paying for a completely unnecessary bit of protection.

Maybe we should all start deducting our Hollywood Video rentals on our tax forms. Bob’s email after the jump.

First off, I recently discovered your truly excellent site, but I’ve yet to really get a feel for the ground you cover, so if what follows is not in your domain, forgive me.

Hollywood video is starting a program August 1st in which you as a renter will be asked to add an extra .25 for each movie you rent as a kind of insurance in case it is damaged beyond repair while in your possession. Signage around the store will alarm you that ‘Accidents Do Happen!’, in which case, if you don’t buy this 25-cent protection you’ll be liable for the full purchase price of the disc.

I work at the store level at a Hollywood Video, and I can assure, you, in the several years I’ve worked for the company, I can think of only two rentals that were returned damaged beyond repair. In both cases that damage was intentional and malicious. In every other case, it’s normal wear and tear that can easily be fixed with the disc-repair machine each store is provided with. Many times, damaged discs are not noticed by the employees, and the disc is put back onto the shelf, at which point someone else rents it and soon returns it for an exchange. My point is this ‘service’ is not needed. Period. It’s simply a doomed-to-fail idea meant to squeeze a few extra dollars out of the ever-declining customer base.

That’s not what bugs me, though.

To encourage people to get this disc insurance, 100% of the funds generated by this new program between August 1-31st will be donated to Hollywood’s children’s charity, the Starlight Starbright foundation ( http://www.starlight.org). After August 31st, an unspecified portion will be donated from the disc insurance proceeds. Starlight is a nice little charity that gives children in the hospitals movies to watch and games to play.

It’s also a 501(c)3 organization.

I suspect Hollywood Video, or rather it’s new parent company Movie Gallery, will be making a massive tax-deductible donation to their charity and next year will take advantage of the tax benefits of said donation, all paid for by their customers.

This is simply a theory of mine, but in line with the new corporate thuggery that’s taken hold of Hollywood lately. I lack the time, knowledge, and job security to really dig into this. I’m not even sure if it’s unethical, but it certainly seems to be an abuse of a non-profit charity for a cash-strapped corporation’s financial gain. If there’s any way for The Consumerist to investigate this, alarm people to this possible tax-scam, anything at all, I’d appreciate it.

I’m currently employed at a Hollywood Video, happily in fact, so I’d like to stay anonymous if this is something you feel like going with. If you need any more information about the program, the charity, or myself, feel free to reply to this email address.

Want more consumer news? Visit our parent organization, Consumer Reports, for the latest on scams, recalls, and other consumer issues.