CHARLESTON -- West Virginia Attorney General Darrell McGraw, along with 49 other state attorneys general and the District of Columbia, announced on Friday it has entered a settlement with Hollywood Video and Movie Gallery.
The settlement resolved allegations of unfair debt collection practices for those Hollywood Video and Movie Gallery customers.
Hollywood Video, which had video rental stores in all 50 states and multiple locations in West Virginia, filed for bankruptcy in 2010. Its accounts receivable were assigned to National Credit Solutions, or NCS, a debt collection agency.
After NCS took over, consumers started reporting numerous problems, including that NCS reported negative credit information to credit bureaus without providing consumers advance notice or the opportunity to challenge the debt.
According to McGraw's office, many consumers first discovered the claimed debt when they were denied for a credit application or had their credit card limits lowered.
According to the agreement, the bankruptcy trustee, Movie Gallery Inc. Bankruptcy First Term Lenders Liquidating Trust, will provide immediate consumer relief by:
* Rescinding all negative information submitted to any credit agency or bureau related to the accounts of customers in participating states;
* Not collecting any fees or interest charges that were added to the principal debt amount;
* Not billing 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;
* Not submitting any future credit reports;
* Complying with the Fair Debt Collection Practices Act; and
* Protecting consumers from future abusive practices in collection of the accounts.
The settlement affects more than three million total consumers in all 50 states and the District of Columbia. The Stipulation and Agreed Order has been filed with the U.S. Bankruptcy Court for the Eastern District of Virginia, Richmond Division.
"This settlement guarantees protections for thousands of West Virginians affected by debt collection practices stemming from Hollywood Video and Movie Gallery accounts," McGraw said in a statement Friday.
"Improper and abusive debt collection practices that result in negative credit reporting can have a serious impact on consumers, so it's important that debts are collected in a fair and lawful manner," he said.