• 28
  • January
    2011

When Hollywood Video and Movie Gallery and the video stores' parent company, Movie Gallery, shut down after filing for bankruptcy a year ago, thousands of people still had late fees or other charges unpaid with the company. Movie Gallery turned those unpaid bills over to a debt collection agency that, in turn, filed negative reports with credit agencies. Now, the state of Montana has filed a lawsuit against the debt collection agency, National Credit Solutions, for violating consumer protection laws.

Montana's attorney general says that people discovered that they had bad credit because of unpaid late fees they didn't even know they had. The lawsuit claims that the debt collection agency filed the negative credit reports without notifying people that they had outstanding debts or giving them a chance to challenge the fees. According to The Associated Press, the lawsuit also claims that the company charged "exorbitant" fees of sometimes hundreds of dollars. The attorney general said that it was ridiculous that a person wouldn't be able to refinance their mortgage because they returned a movie a couple of days late.

Like Blockbuster, Movie Gallery's brick-and-mortar on-site video rental stores lost business to Netflix's DVD-mailing service and other Internet-based movie rentals. The company filed for bankruptcy last February. The company has now notified the debt collection agency to rescind any negative credit reports filed and notify customers by mail that they have delinquent debts. The company will file the negative reports again in 45 days if the debts go unpaid.

Source:

Montana Files Lawsuit Over Video Late Fees (NPR)