hollywood videoFormer Hollywood Video and Movie Gallery customers say they are getting calls from a collection agency demanding payment for unreturned videos and games. The rental company started closing stores nationwide in 2009 and declared bankruptcy in February 2010.

Consumers say the agency is charging "excessive fees" and making negative credit reports without proper notification and dispute options.But the collection agency, National Credit Solutions, says it's only asking a $49 collection fee and the price of the products kept by the consumers.

Better Business Bureau officials in West Virginia and Oklahoma have issued warnings about the company. And Montana's attorney general is suing the collection agency on behalf of more than 12,000 former Hollywood Video/Movie Gallery customers who are being asked to pay late fees and charges for videos and games they can no longer return.

Steve Bullock, Montana's AG, says consumers were never notified that there was a problem and they were not given an opportunity to dispute the charges or pay the debt. Many customers said they only found out there was a problem when a negative rating showed up on their credit account when they went to refinance their house or purchase a car.

"We started hearing complaints about six or seven weeks ago and they all followed a similar pattern, that when they were applying for a loan or had a subscription to a credit monitoring service they had a ding on their credit," said Kevin O'Brien, spokesman for the Montana AG's office. "When NCS contacted them, some of them say it was the first time they were told that they supposedly owed a late fee... and those fees range from under $100 to upwards of $400."

But National Credit Solutions President Brett Evans says people had plenty of time to return the goods to the now-defunct stores, and they need to pay for the things they kept.

He says a federal judge turned over more than two million problematic accounts to Movie Gallery, which owns Hollywood Video, in February. The company has the right to collect on accounts, even if the company is bankrupt, Evans said.

NCS, based in Oklahoma City, charges a $49 collection fee, Evans said. The other costs are directly related to the products rented by the consumer.

"I've got people who call in and say that they kept six PlayStation 3 games," said Evans. "Well, each one is around $60, and they were even more expensive back then."

The collection agency said it sent notices about the charges in March and was told that Movie Gallery sent out letters before closing stores. Most of the fees are due to unreturned products, Evans said, adding that customers can dispute the charges.

Montana officials say NCS has agreed to withdraw all negative credit reports against Montana customers. Even so, officials say if you were a Hollywood Video or Movie Gallery customer, you should check your credit report to see if there is a problem.

If there is an error:
  • Request written proof of the debt by certified return receipt
  • Dispute the debt in writing. Send all correspondence by certified return receipt.
  • Keep copies of all letters and documents.
Montana officials do say if a consumer "owes a legitimate debt, National Credit Solutions has the right to lawfully collect that debt. In doing so, however, the collection agency may not demand unlawful collection fees and other charges that are not legitimate."

Evans of NCS says he never imagined there would be problems with Hollywood Video as a client. He said he had an "A" rating with the Better Business Bureau before this issue.

"I thought this would be a straightforward collection," he said.

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