Office of the Attorney General
Former Movie Gallery and Hollywood Video Customers Protected from Abusive Collection Practices under Settlement
Attorney General Jack Conway wants former customers of Hollywood Video and Movie Gallery who are contacted about collections of their old accounts to be aware of an Agreed Order protecting them from certain collection practices. In May of 2011, Kentucky, along with all other states and the District of Columbia, joined in the Agreed Order with the bankruptcy trustee overseeing the collection of these customer accounts.
Hollywood Video and Movie Gallery were video rental companies operating nationwide, with more than 80 Kentucky stores. The companies filed bankruptcy in 2010, and the court appointed a trustee to oversee the collection of more than three million accounts. That includes the accounts of more than 49,000 Kentuckians allegedly owed for late return fees or product charges.
"This settlement helps protect Kentucky consumers from abusive collection practices and gives them a better opportunity to object to charges that they dispute," General Conway said. "Collection fees or interest should not be added to these accounts by the debt collection companies, and negative credit reports should not be made about the accounts. These protections help ensure that Kentucky consumers are treated fairly."
The Agreed Order was reached after the states contacted the trustee about numerous consumer complaints regarding Credit Control Services, Inc. (CCS) and National Credit Solutions, LLC (NCS) the independent debt collection companies hired by the trustee. The Agreed Order did not settle any claims against third party debt collectors. The trustee has restarted collection efforts nationwide, and the debt collectors currently handling these efforts include West Bay Acquisitions LLC and Universal Fidelity.
In summary, the Agreed Order provides the following relief to consumers:
- Disputed Accounts – If a consumer disputes the debt either verbally or in writing, collection activities on the account will be suspended while the trust investigates its records to determine if there is a reasonable basis to conclude that the amounts are in fact due and owing in accordance with the contractual terms applicable to the customer. Although the Agreed Order allows the trust to attempt to collect valid debts, the Attorney General has not agreed or determined that any particular consumer’s account is in fact a valid debt.
- Amount Collected - No collection fees or interest will be added to the principal amounts owed on the accounts. Only the lesser of a late fee or product charge will be collected on an item, but not both. If only a product charge is owed on an item, it will be not collected.
- Credit Reports – The trust must take steps to assure that the debt collectors it hires do not imply or say to customers that failure to pay the account could result in adverse credit reporting. No reports about the accounts will be submitted to credit bureaus, and any previously submitted credit reports will be cancelled.
Link to the Agreed Order http://goo.gl/EDzhX
Kentucky consumers affected by the collection of these accounts may file a consumer complaint with the Kentucky Attorney General's Office of Consumer Protection. Complaint forms are available at http://ag.ky.gov/civil/consumerprotection/complaints/ or by calling 1-888-432-9257 (choose option 3) or 502-696-5389.
Consumers wanting more information about their rights under federal debt collection practice laws should visit the Federal Trade Commission's website at http://www.ftc.gov/bcp/menus/consumer/credit/debt.shtm