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Attorney General Peter Kilmartin Announces Agreement with Hollywood Video For Late Fee Debt Collection Efforts

Attorney General Peter F. Kilmartin joined several Attorneys General in approving a settlement agreement with Hollywood Entertainment Corporation/Movie Gallery, Inc. dba Hollywood Video and Movie Gallery, resolving allegations of improper third-party debt collection practices.

The problems started after Hollywood Video and Movie Gallery filed for Chapter 11 bankruptcy in 2010. Hollywood’s approved plan created a liquidating trust to collect an estimated $244 million in outstanding debts reportedly owed by 3.3 million customers. The trust contracted with Credit Control Services, Inc. in Massachusetts, which subcontracted to National Credit Solutions of Oklahoma.

Soon after Hollywood Video filed bankruptcy in 2010, people were shocked to learn of alleged non-payment of late fees associated with Hollywood Video – some only a few dollars – that were being reported to national credit agencies. Some consumers were unaware they owed fees to Hollywood video, and only learned of the situation when they were denied credit.

“This situation had all the hallmarks of a bad straight-to-video movie,” said Attorney General Kilmartin. “It is simply ridiculous for a person’s credit rating to suffer over a few dollars they allegedly owe in late fees for turning in a move rental a day or two late. Under the federal Fair Debt Collection Practices Act, consumers have a right to pay or dispute their debts before they are reported to credit agencies. We will not tolerate debt collection agencies that use deceitful tactics and bullying to intimidate consumers into paying debts they may not even owe.”

The agreement was filed in the U.S. Bankruptcy Court for the Eastern District of Virginia, Richmond Division. Under the settlement, the trustee will:

Rescind all negative information submitted to any credit agency or bureau related to the accounts of customers in participating states. Additionally, no further credit reports will be submitted.

Not collect any fees or interest charges that were added to the principal debt amount.

Not bill customers for both a late fee and the full price of items that were supposedly not returned. For accounts that include both a late fee and a charge for a damaged, late or never-returned product, the collection agency will only pursue the lesser charge.

Comply with the federal Fair Debt Collection Practices Act.

Assist the Attorneys General in any effort to recover collection fees that were improperly paid by customers.

The agreement does not resolve claims against third-party debt collectors.

Attorneys General for the following states and the District of Columbia participated in the settlement: Alabama, Alaska, Arizona, Arkansas, California, Colorado, Connecticut, Delaware, Florida, Georgia, Hawaii, Idaho, Illinois, Indiana, Iowa, Kansas, Kentucky, Louisiana, Maine, Maryland, Massachusetts, Michigan, Minnesota, Mississippi, Missouri, Montana, Nebraska, Nevada, New Hampshire, New Jersey, New Mexico, New York, North Carolina, North Dakota, Ohio, Oklahoma, Oregon, Pennsylvania, Rhode Island, South Carolina, South Dakota, Tennessee, Texas, Utah, Vermont, Virginia, Washington, West Virginia, Wisconsin and Wyoming.

The Office of the Attorney General Consumer Protection Unit investigates and mediates consumer complaints concerning unfair and unlawful business practices and misleading advertising arising out of alleged violations of the Deceptive Trade Practices Act. If groups of people are victimized by a deceptive trade practice, this office may file in the Superior Court a civil investigative demand, which is a formal investigation. In appropriate cases, a lawsuit to stop the illegal business practice may be initiated.

Apart from carrying out its statutory responsibilities, the Unit also provides information and referral services to the general public. Consumers are directed to the appropriate governmental or private agencies for help in answering specialized questions or resolving disputes that are not within the Unit's jurisdiction.

The Consumer Protection Unit is available to speak to community groups on how to prevent being a victim of identity theft and other scams. If you believe you are a victim of consumer fraud, please contact the Consumer Protection Unit by calling 401-274-4400 or email at contactus@riag.ri.gov.

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