HELENA – If you didn’t return that copy of “Ghostbusters” before Hollywood Video and Movie Gallery closed their doors for good last year, you may run into credit trouble if you’re looking to take out a mortgage or finance a car.
That’s because a debt collection agency may have filed negative reports to credit agencies for thousands of Montanans who owed late fees when Movie Gallery, the parent company of the video rental stores, went bankrupt last year, state Attorney General Steve Bullock said Wednesday.
Movie Gallery operated 24 stores across Montana under both names when it filed for bankruptcy on Feb. 3. The store didn’t notify any customers of any late fees or charges owed but turned control of those accounts to a debt collection company, the attorney general’s office said.
That company, National Credit Solutions, filed negative credit reports without informing the customers, never gave them a chance to dispute the fees and then tried to charge them “exorbitant” fees on top of what they reportedly owed — more than $300 in the worst cases, Bullock’s office said.
The attorney general filed a lawsuit against the debt collector on Wednesday, alleging the company engaged in unfair and deceptive debt collection practices in violation of the Montana Consumer Protection Act.
“It’s crazy to think that a Montanan would be prevented from refinancing their house or buying a new car simply because they returned ‘Caddyshack’ two days late,” Bullock said in a statement.
It’s believed to be the first such lawsuit against the company, and it was not immediately clear whether people outside of Montana had been affected.
Nobody answered the phone at the debt collector’s Oklahoma-based offices and a message was not immediately returned.
Attorney general spokesman Kevin O’Brien said the state Department of Justice received 15 complaints against Movie Gallery in December. That led the department to launch an investigation that showed the company was trying to collect from 12,325 Movie Gallery customers from Montana.
The attorney general’s office is asking a judge to grant an injunction against National Credit Solutions, order the company to provide restitution to the video store customers and punish the company with a $10,000 fine for each violation of law.
Many of those customers don’t know they might owe fees and the department doesn’t yet have all their names, O’Brien said.
In some cases, the customer may have been charged for failing to return a movie when the person actually had, the lawsuit alleges.
Some learned about the black mark on their credit reports and traced it back to National Credit Solutions, according to the lawsuit.
When contacted by the customers, National Credit Solutions demanded “payment of exorbitant, unreasonable and unconscionable charges that are disproportionate to any amount that could properly have been demanded by Movie Gallery related to any late charge or other charge that the consumer may have incurred at Movie Gallery before it closed its stores,” the lawsuit alleges.
Many of them paid for fear of hurting their credit score, according to the lawsuit.
But others challenged the company. In some of those cases, the debt collector voluntarily agreed to forego any further collection efforts and rescinded the adverse credit reports, the lawsuit said.