Hollywood Video Debt Collection Settlement Impacts Thousands Of Kansans

By: KAKE News Email
By: KAKE News Email

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May 12, 2011

An agreement announced today impacts thousands of Kansans who may have received unfair debt collection notices.

Hollywood Video filed for bankruptcy last year. After that, debt collection agency National Credit Solutions took over its accounts, billing thousand of Kansans. Those bills included movie late fees and other charges. The settlement announced today wipes those extra charges clean.

"I felt like they've heard the people about this," said Karen Stiner, one of thousands to receive a notice.

Stiner had a different sentiment when we first spoke to her in January. She had just received a collection notice for nearly $100 owed to Hollywood video. For what? She didn't know.

"I think they kind of were going after what they could get, and [by] whatever means they could go to get it," said Stiner.

So Stiner disputed the charges. Then in February, she received another notice saying the agency was no longer trying to collect the money from her. But she says the ordeal still cost her days of time and unnecessary stress.

"I am outraged by the whole thing, and I'm somewhat disgusted by the fact that everybody had to be put through this," said Stiner.

Stiner is one of nearly 20,000 Kansans to go through the same thing. It's an ordeal the state Attorney General calls unfair debt collection practices on movie late fees.

"Not only saying they had late fees but also saying they owed significant interest charges and penalty fees. These penalty fees were just exorbitant," said Jeff Wagaman, spokesman for the KS Attorney General's office.

When people didn't pay those fees, their credit score fell. So, the state got involved. Now, a settlement wipes credit reports, collection fees, and interest charges away. Only the original movie late fee is left for customers to pay.

"By joining together I think we have made them aware that we're not just going to sit down and take it," said Stiner.

Stiner says she has also learned something from all of this.

"If you sign something, even if it's just for a little contract, like for renting a movie, you better think twice about it," said Stiner.

Hollywood Video had about 3.3 million customers in all 50 states. All 50 attorneys general reached the same settlement agreement with the company, according to Wagaman.


Kansas Attorney General Derek Schmidt today announced a settlement to resolve allegations of unfair debt collection practices of Hollywood Video and Movie Gallery by customers nationwide. The settlement affects 19,903 former Kansas customers.

“Numerous Kansans contacted our office regarding these debt collection practices from Hollywood Video and Movie Gallery accounts,” Schmidt said. “Ensuring that debts are properly and fairly collected is important to consumers and businesses, so we are pleased this agreement has been reached.”

Hollywood Video had 3.3 million total consumers at video rental stores in all 50 states, including 45 locations in Kansas. After filing for bankruptcy in 2010, its accounts receivable were assigned to National Credit Solutions, a debt collection agency.

Consumers reported numerous problems, including finding that NCS had reported negative credit information to credit bureaus without providing consumers advance notice or the opportunity to challenge the debt. Many consumers only discovered the claimed debt when their credit was negatively affected and they were denied credit or had credit limits lowered.

In the agreement, the bankruptcy trustee, Movie Gallery, Inc. Bankruptcy First Term Lenders Liquidating Trust, agreed to cancel all previously submitted credit reports and not to submit any future credit reports or charge collection fees or interest on principal amounts consumers owe.

The settlement applies only to the trustee; it does not affect any third party debt collection practices. It was filed with the U.S. Bankruptcy Court for the Eastern District of Virginia, Richmond Division.

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