May 5, 2011
(COLUMBUS, Ohio) – Ohio Attorney General Mike DeWine today along with 49 other state attorneys general and the District of Columbia announced a settlement to resolve allegations of unfair debt collection practices for Hollywood Video and Movie Gallery customer accounts.
"This settlement provides important protections for the more than 100,000 Ohioans affected by debt collection practices for Hollywood Video and Movie Gallery accounts," Attorney General DeWine said. "Debt collection and resulting credit reports can have a serious impact on consumers, so it's important that debts are collected in a fair manner."
Hollywood Video had video rental stores in all 50 states with 253 outlets in Ohio. It filed for bankruptcy in 2010, and its accounts receivable were assigned to National Credit Solutions (NCS), a debt collection agency.
After NCS took over, consumers reported numerous problems. Most significantly, they said NCS reported negative credit information to credit bureaus on a widespread basis, without providing consumers advance notice or the opportunity to challenge the debt. Many consumers first discovered the claimed debt because their credit was negatively affected when either they were denied for a credit application or had their credit card limits lowered.
In the agreement, the bankruptcy trustee, Movie Gallery, Inc. Bankruptcy First Term Lenders Liquidating Trust, agrees to provide immediate consumer relief by:
- Canceling all previously submitted credit reports.
- Not submitting any future credit reports.
- Not charging collection fees or interest on principal amounts consumers owe.
- Not charging double for late fees.
- Protecting consumers from future abusive practices in collection of the accounts.
The settlement affects approximately 3.3 million total consumers in all 50 states and District of Columbia, including 113,114 Ohio consumers. The settlement applies only to the trustee; it does not affect any third party debt collection practices.
The settlement, or Stipulation and Agreed Order, has been filed with the U.S. Bankruptcy Court for the Eastern District of Virginia, Richmond Division.
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Lisa Hackley: 614-466-3840
Dan Tierney: 614-466-3840