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Hollywood Video rises from grave to pursue late fees: Plain DealingPrint Email >Sheryl Harris, The Plain Dealer By Sheryl Harris, The Plain Dealer The Plain Dealer
on May 19, 2012 at 12:00 PM
The romantic comedy Maria Lopez rented in 2009 turned into a horror flick this year: Night of the Living Debt Collector.
Lopez, who lives in Cleveland, got a collection notice last month demanding she pay $74.23 for eight movies she rented from Hollywood Video in 2009.
Lopez is adamant she doesn't owe the fees. She rented the movies, she says, but her saved receipts prove the dates listed on the collection notice are just plain wrong.
Hollywood Video has risen from the grave of bankruptcy to lurch after millions of consumers nationwide that it says owe late fees.
If that plot sounds familiar, it's because it is a remake of Hollywood Video's disastrous effort to collect from consumers last year.
Back then, the trustee charged with liquidating Hollywood Video and Movie Gallery hired an aggressive collector who tacked interest and extra fees onto what consumers owed, prompting the 50 state attorneys general to intervene.
They wrested a settlement agreement from the trustee, the First Lien Term Lenders Liquidating Trust, that protects Hollywood customers from, among other things, larded-on fees and interest, multiple charges for the same item and collections accounts placed on their credit reports.
This year, the trustee started fresh and hired three new debt collectors, A.R.M. Solutions, Universal Fidelity LP and West Bay Acquisitions.
Still, consumers from Los Angeles to Boston are complaining that, years after the fact, they're being blindsided by demands they pay late fees or other charges for movies they don't remember renting.
Hollywood customers who haven't received notices aren't off the hook: Collectors are still working through the massive list of debtors.
More than three dozen consumers in Ohio alone have complained to the attorney general's office since January about the collection notices – many to alert the office to what they believed was a scam.
The backlash caught collectors off guard.
"I don't think anybody knew there would be this much pushback," said Paul Farinacci, who works for Universal Fidelity.
Some consumers saw Internet postings about last year's settlement and concluded – wrongly -- that the trust was forbidden from trying to collect on Hollywood accounts.
To clear up misunderstandings, all three collectors have posted answers to frequently asked Hollywood Video questions and linked to the 2011 multistate settlement on their websites.
But the biggest problem may be the rental records from the now defunct Hollywood Video.
Debts in doubt
When Cynthia Zulla of Cincinnati got a collection demand for $30.51 in March, she told the attorney general it had to be a scam because she checked with the store just before it closed in 2009 and was assured she owed nothing.
Some consumers told the attorney general they enrolled in a Hollywood membership program that advertised "no late fees" and let them keep movies for extended periods without penalty. Others said they let Hollywood automatically charge late fees to their credit cards, so they cannot owe the company.
Others say the rentals just aren't theirs.
"I've never heard of these titles," said Jennifer Miller of Middleton, an infrequent Hollywood customer who got a demand for $84 from A.R.M. "It just seemed sort of like a scam to me."
Details on the collection notices are fairly sketchy.
The demand Lopez got from A.R.M. contains eight movie titles, a date for each movie (it's unclear whether it is a rental date or a due date), and a "total due" that isn't itemized.
Lopez said the dates on the notice don't match those on her original receipts. Some predate the rental.
And, Lopez said, she has no idea what to make of this line from the collection notice: "Your total amount due may include some titles not listed here."
Brad Jadwin, A.R.M.'s president, said collectors originally sent a standard collection notice that had barely more than Hollywood Video's name and a total due, but the "violent reaction" from consumers persuaded collectors to list titles and dates in the next set of mailings. He said more info may be added in the next round of collection notices.
Jadwin said the collectors can provide additional details to consumers who ask, and they will investigate disputes.
"Anytime a consumer tells us they dispute something, we provide the data," Farinacci agreed. "If we can't verify (the debt), we close the account."
Consumers presented with demands for Hollywood Video and Movie Gallery are in a unique position. They have the debt collection rights that all consumers have, and they have added protections from the 2011 multistate settlement.
Any consumer who gets a collection notice has options:
• Consumers who believe the debt isn't theirs should dispute the debt, and it's best to do so in writing. That obligates the collector to make sure it has the right consumer and provide more information about the account.
• Consumers who think the debt is valid can either pay up or try to negotiate a lower amount. Collectors don't have to take less, but if consumers strike a deal, they should ask for a letter that confirms their payment will settle the debt in full before they pay. File all documents relating to the debt.
Under the multistate settlement, consumers have these special rights:
• Hollywood Video and Movie Gallery debts cannot ever be placed on consumers' credit reports.
• Consumers cannot be charged interest or collection fees on top of what they owe.
• Consumers cannot be asked to pay multiple fees for the same item. If they owe a late fee on a movie and a fee for failing to return the same title, the trustee can only ask them to pay the lesser of the two fees.
• The trustee can't pursue a debt for a product fee (for example, a charge for an unreturned movie or game) if the consumer's account shows no other charges for that item.
• If the trustee ever sells the debts – and it has not done so – it must write the settlement terms into the sales contract.
There's anecdotal evidence that some consumers tossed the collection notices believing them to be scams. They still can dispute.
Those who aren't sure which collector contacted them can email the trustee at firstname.lastname@example.org
Or write to the trustee at Hollywood Video/Movie Gallery Customer Service, c/o Ryan Storfa, 7405 Southwest Tech Center Drive, Suite 130, Tigard, OR 97223.
Jadwin suggested that people who want to return movies or games they were stuck with when the stores closed can mail them to the trustee. (Get proof of delivery.)
Consumers who can't resolve Hollywood Video issues with the trust or its collectors should contact the Ohio attorney general at ohioattorneygeneral.gov or 1-800-282-0515.
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