After the video rental chains went bankrupt in 2010, a liquidating trust hired debt collectors to collect an estimated $244 million in outstanding debts reportedly owed by 3.3 million former customers. It was then that states started getting consumer complaints from former customers over fees and damaged credit -- with many claiming they didn't owe the money in the first place.
"Collection laws require that consumers have a chance to pay or dispute their debts," said Washington state Assistant Attorney General Mary Lobdell in a statement. "But starting in October, we received a flurry of complaints from Washington residents who told us they didn't owe the fees or were never informed of these debts before they were reported to the credit bureaus."Under the settlement, First Lien Term Lenders Liquidating Trustee agreed to:
- Rescind all negative information submitted to any credit agency or bureau related to customer accounts and not submit any future credit reports.
- Not collect any fees or interest charges that were added to the principal debt amount.
- Not bill 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.
- Comply with the Fair Debt Collection Practices Act.
- Assist the states in any effort to recover collection fees that were improperly paid by customers.
The Western Pennsylvania chapter of the Better Business Bureau also offers the following steps to take if you do not owe the debt that someone is attempting to collect from you:
- Don't ignore the collector, who could continue to contact you or file a judgment.
- Don't claim a debt that isn't yours or make a payment. That could affect your credit report.
- Dispute any mistakes.
- Be wary of possible identity theft. A call from a debt collector could be a sign your identity was stolen.