The following is a Press Release from the Better Business Bureau:
Several former customers of Hollywood Video stores in the local area are among hundreds of consumers nationwide who say they have been contacted by debt collectors claiming they still owe the defunct business for overdue rentals.
The former customers have told the Better Business Bureau (BBB) they do not owe anything. Some said they were worried that the collection companies would try to damage their credit records over the bogus bills.
The BBB has received several calls and complaints against West Bay Acquisitions and a second company, Universal Fidelity of Houston, Tex. The two companies are working on behalf of the bankruptcy trustee for Movie Gallery, owner of the closed Hollywood Video chain, trying to collect what the trustee believes may be millions of dollars in unpaid bills.
Local consumer complaints represent a small percentage of the more than 1,400 complaints filed nationally in the past 12 months against West Bay and Universal Fidelity. Most of those complaints involve what consumers claim are bogus Hollywood Video or Movie Gallery charges. While many of the complaints involve bills of less than $50, several concern bills of more than $100.
West Bay has an "F" grade with the BBB, the lowest grade possible. Universal Fidelity has a "C" grade.
Carmen Million, BBB president, said consumers should not be pushed into paying bills they do not owe. "It's one thing if a customer still owes money for a past-due rental, but it's another if these debt collection companies are pressing them -- even unintentionally -- to pay bills they never owed or already have paid. The enormous number of complaints seems to indicate that something is wrong."
The recent flurry of complaints comes nearly three years after local Hollywood Video stores were shut down and two years after the business filed for bankruptcy.
One year ago, the company's bankruptcy trustee signed an agreement with officials of all 50 states promising to take action that Kentucky's attorney general said would help protect consumers from "abusive collection practices" and give those consumers a better opportunity to object to disputed charges. The agreement specifically bans Hollywood Video collection agencies from issuing notices to any credit reporting agency and prohibits the collection of additional fees or interest charges. They also promised not to pursue disputed cases without an investigation.
That agreement followed numerous complaints involving two other independent debt collection companies hired by the trustee.
Since the agreement, the complaints against West Bay and Universal Fidelity have continued. BBB offices in Boston, which handles the West Bay complaints, and Houston, which handles the Universal Fidelity complaints, both say the two businesses have been resolving their complaints. Records show that in most cases, the companies have agreed to stop pursuing payment if the former customer disputes the claim.
The BBB offers the following advice to consumers contacted by a debt collection firm:
Know your rights. Under federal and state law, debt collectors are prohibited from using threats of violence or harm against a person, property or reputation. They cannot threaten to garnish your wages unless they intend to do so, and cannot use phone calls to repeatedly harass you.
Ask for written proof of your debt. By law, a debt collection agency must provide you with a validation notice within five days of contacting you about the debt.
Tell the collector in writing to stop contacting you. Under federal law, a debt collector cannot continue to contact you – at work or home – once you have told them in writing to stop.
If the company continues to badger you, you can file a complaint with your state's attorney general, the Federal Trade Commission (www.ftc.gov) or the BBB.