Once, we sent a movie back that never reached Netflix for whatever reason. Another time, they sent a movie to us that never reached us. As far as I can tell, we've never been charged for either one.
I know that Netflix recently reduced their per month price. I think it's now $17.95, you get a max of three movies at a time, and you can keep them for as long as you want. You set up the list of movies you want to see, and they send you the first three.When you finish one, just pop it into the pre-paid mailer. When they receive it, they'll send you the next available one on your queue, and you just keep that going.
Blockbuster does something differently. They dont sit around and wait for the DVD to arrive at their distribution center before sending out your next selection to you.
When you retun the DVD either to the post office or in the mailbox, the post office, the one nearest you, scans the envelope containing your returned DVD. When that happens, Blockbuster sends out the next one(s) in your queue.
Once they have that electronic confirmation from your post office, they send out your next selection(s). I have no idea if Netflix is doing this too.
I did some of their systems design very early on in the companies history (yet one more case of a company I worked at that I could have made a killing on if I'd stayed), and am familiar with basic statistics at that time.
Generally speaking, the loss rate was far higher than you might imagine, the average lifespan of a DVD being around ten trips at that time. Consequently, a high loss rate was built into their cost model up front, though they've minimized it to the extent possible and they probably do much better today. If you only lost two DVDs out of three hundred, they came out way ahead on you. We personally have probably lost a dozen or so over the years either coming or going. This is both expected and normal from the standpoint of Netflix.
They do look for statistical anomalies in individual subscribers that might suggest fraud, but the noise floor is quite high. I don't know what the numbers might look like today for typical "breakage", but they won't charge you anything if the occasional DVD gets lost in the mail because it is assumed that this will happen and is buried in their pricing model. If you make a habit of "losing" DVDs, they'll probably just cancel your subscription, or maybe send the postal inspector snooping.