AG Van Hollen: Announces settlement regarding Hollywood Video debt collection

For More Information Contact:

Bill Cosh 608/266-1221

MADISON – Wisconsin Attorney General J.B. Van Hollen 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. The settlement affects approximately 3.3 million total consumers in all 50 states and the District of Columbia, including 46,700 affected Wisconsin consumers.

Hollywood Video and Movie Gallery had video rental stores in all 50 states with 84 outlets in Wisconsin. 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, consumers complained that 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.

“These are challenging times for many hardworking Wisconsin consumers who are struggling to get by financially. During these times, debt collection practices and resulting credit reports can have serious consequences on consumers’ financial stability,” said Attorney General Van Hollen. “This settlement provides important protections for the more than 46,000 Wisconsinites affected by debt collection practices for Hollywood Video and Movie Gallery accounts.”

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, or Stipulation and Agreed Order, has been filed with the U.S. Bankruptcy Court for the Eastern District of Virginia, Richmond Division. The settlement applies only to the trustee; it does not affect any third party debt collection practices.

Assistant Attorney General Lara A. Sutherlin represented the State in this matter, and assistance was provided by the Wisconsin Department of Financial Institutions.

A copy of the settlement is available at