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Attorney General Announces Settlement With Video Rental Chain

CONTACT: Elliot Burg, Assistant Attorney General, (802) 828-5507

May 6, 2011

Vermont Attorney General William H. Sorrell and 49 other state attorneys general have settled allegations of unfair debt collection practices involving consumer accounts at the now-bankrupt Movie Gallery, Inc., also known as Hollywood Video, a video rental chain that once had six outlets and over 27,000 members in Vermont.

When Movie Gallery filed for bankruptcy in Virginia in 2010, its accounts receivable were assigned to a debt collection firm called National Credit Solutions (NCS). Consumers around the country began to complain that NCS was reporting negative credit information to credit bureaus without giving them an opportunity to challenge the debt, double-charging them for video replacements and late fees, and seeking to collect amounts that were not owed, among other practices.

Under the settlement, the Trustee in the Movie Gallery bankruptcy will:

  • Withdraw all previously submitted credit reports.
  • Not submit any future credit reports.
  • Not charge collection fees or interest on principal amounts owed by consumers.
  • Not collect both late fees and video replacement charges for the same item, but only for the lesser of the two amounts.
  • Not collect video replacement charges if they are the only fee owed for that transaction.
  • Protect consumers in the future from abusive collection practices.
  •   Website consulting provided by The National Association of Attorneys General.