Late Video Store Haunting Former Customers with Collection Notices

When the collection notice arrived in the mail, Donald Lee said he was floored.

The letter said he owed nearly $90 in fees — to a video rental store that closed three years ago.

Hollywood Video closed its doors in the village in 2009, and shortly after, the long-standing video and game rental store’s parent company Movie Gallery Inc. filed for Chapter 11 bankruptcy protection — with the company hemorrhaging revenue — and closed the rest of the once 84 stores in southeastern Wisconsin.

The company would eventually shut down all of the video rental stores it had in all 50 states, hiring collection agencies to collect debts from former customers and sparking nationwide disdain from consumers labeling different agencies' collection practices unfair and alleged debts excessive and outrageous. 

Company claims customers owe hundreds in late fees

Three years after the video store at 4231 N. Oakland Ave., , closed in Shorewood, Lee received his first notice in mid-January 2012. 

The notice claims his family owes $89 for nine video games and one movie. It’s unclear whether the bill is for late or unreturned movies.

Lee said his family returned everything they ever rented from Hollywood, and were proactive with returning rentals on time.

And like other former customers, Lee said he never received any notice after the store closed in Shorewood that he owed the store late fees.

Oddly enough, the collectors also say the total debt may include fees for other rentals not listed on the notice.

Collection efforts started in early 2011, but since the beginning of the year, former Hollywood customers say a second round of collection efforts have started, this time from a different group of agencies.

Some say they get notices claiming they owe hundreds in overdue fees. A Tampa Bay woman told a local news outlet collectors claim she owes Hollywood $645. Others argued they never rented the movies Hollywood claims they owe late fees for.

Lee said while his son did rent video games frequently from Hollywood, the invoice was vague and he is “fairly certain overdue fees — if any — never amounted to that significant sum.”

“It is possible we had a couple of small overdue fees but I really don't think I would have had a sum of this quantity, much less allow overdue fees to compile over approximately six months as the invoice suggests," he said.

He told West Bay Acquisitions, the collection company assigned to his account, he would not pay the alleged debt until he was given further, and more accurate, information.

West Bay didn’t return a request for comment from Shorewood Patch.

Attorney generals put stop to 'unfair practices'

In mid-May 2011 Wisconsin, along with 49 other states, settled with Movie Gallery, and the company agreed to end what attorneys general from every state labeled unfair collection practices.

State Attorney General J.B. Van Hollen said former Hollywood customers complained of collectors reporting negative credit information to credit bureaus, without providing consumers advance notice or the opportunity to challenge the debt.

Van Hollen said many consumers first discovered the claimed debt because their credit was negatively affected when either they were denied for a credit application or had their credit card limits lowered.

The agreement stipulated the agency would not add any additional fees or interest to principal debts Hollywood believed former customers owed and would cease reporting the debts to credit bureaus.

According to the agreement, collectors are seeking debts from some 3.3 million consumers in all 50 states and District of Columbia, including 46,000 Wisconsinites.

In Seattle, the Attorney General’s office said it fielded 40 new complaints, questioning the company’s collection efforts, according to a local news outlet’s report.

BBB issues alert

The Better Business Bureau reported it has also received numerous complaints about unfair and questionable collection notices for supposed Hollywood debt, but that agencies can only collect on late fees, and are not allowed to collect for unreturned videos or add any additional collection fees.

Lee wondered if other former local Hollywood customers are fielding the same debts notices.

"I have a real concern that other customers of Hollywood Video in Shorewood have received similar questionable bills," he said. "I question the legality of this action."