Thousands of customers in Montana who owed late fees or any other charges pending at the now defunct Hollywood Video and Movie Gallery are finding it difficult to get a mortgage or finance a car.
Movie Gallery, the parent company of the video rental stores and once the second-largest video rental chain, went bankrupt last year, and the debt collection agency National Credit Solutions is now trying to collect from its past customers. National Credit Solutions filed negative credit reports without informing the customers and did not give customers the opportunity to dispute the fees, according to a lawsuit filed by Montana’s Department of Justice on behalf of the customers.
National Credit Solutions is also accused of charging the customers penalty late fees--more than $300 in some cases--on top of what they already owed.
The black marks on the customers’ credit reports are preventing some from getting loans or refinancing a mortgage. But some customers say they are being charged for failing to return a movie even when they had.
Movie Gallery is trying to collect from 12,325 customers from Montana. It’s unclear whether customers outside of Montana had been affected, too.
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, State Attorney General Steve Bullock said in a statement.
Source: “Montana Files Lawsuit Over Video Late Fees,” Associated Press (Jan. 26, 2011)