Zombie debt collections: Hollywood Video is dead, but bills still haunt consumers - Red Tape
Zombie debt collections: Hollywood Video is dead, but bills still haunt consumers
By Bob Sullivan
Talk about Red Tape: Consumers across the country say they are being harassed into paying bills they don't owe to a company that no longer exists. And it's not the first time. Like a monster in a bad horror flick, every time this Hollywood Video debt collection controversy seems to be killed, it keeps coming back to life.
When Hollywood Video and its parent, Movie Gallery, went out of business in 2010 and declared bankruptcy, they had only one real asset: unpaid fees. About 3 million U.S. residents owed money to the firm — a lot of money — nearly a quarter of a billion dollars, according to the Rhode Island attorney general's office. But attempts to collect that money on behalf of Hollywood Video's creditors have become a series of bad horror flicks to former customers, who claim they are being repeatedly harassed by debt collectors waving bills the consumers don't owe. And now, an NBC News investigation of 500 complaints filed against one of those firms in the past 90 days — Universal Fidelity — shows that consumers accuse the company of everything from bullying to threatening to ruin their credit, despite promises to all 50 state attorneys general that it would never do so.
he pile of complaints, provided to NBC News by the Houston office of the Better Business Bureau, offers a rare glimpse into the consumer side of the collections business.
'Not in business to harass'
Paul Farinacci, president and chief executive of Universal Fidelity, denied accusations of harassment and said his telephone representatives are schooled to operate within the law.
"Everybody here is trained in customer service. ... We are not in business to harass, harangue or threaten people," he said. He also said his company had unfairly become a "consumer advocate punching bag."
The Hollywood Video collections saga has already been through two nasty episodes. In 2011, when collections for unpaid late fees and unreturned movie charges first began, complaints quickly piled up against Oklahoma-based National Credit Solutions. Consumers said their credit reports were being ruined by $39 late fees they didn't owe, and they claimed that operators for the firm were ruthless.
The drumbeat became so loud that Hollywood Video's bankruptcy trustee, First Lien Term Lenders Liquidating Trust, reached a settlement with all 50 states' attorneys general under which it would drastically alter its collection tactics. It promised to remove any credit blemishes it had placed on consumers' reports and never to threaten consumers' credit reports in the future. It also turned to a set of new collection agencies, including Houston-based Universal Fidelity, which promised to clean up the process.
But within the past two months, a pile of fresh complaints has arrived from around the country, raising new questions about the collections process. In Houston, 430 of the roughly 1,000 complaints filed against Universal in the last 12 months have arrived since June 1.
The Virginia BBB office warned of a "flurry" of new complaints last month; the situation got the attention of the St. Louis Better Business Bureau office, which issued a new consumer warning July 5.
"The enormous number of complaints seems to indicate that something is wrong," Michelle Corey, president and chief executive of the St. Louis BBB, said in the warning. The agency also said there was an increase in complaints against a second Hollywood Video collection company, Rhode Island-based West Bay Acquisitions. That company did not immediately respond to request for comment sent via telephone and e-mail. According to the Boston chapter of the Better Business Bureau, about 180 complaints have been filed against West Bay since June 1. The firm has responded to those complaints statements like this:
"West Bay Acquisitions abides by all ... laws. It is our company policy that all disputed debts be thoroughly investigated," it says in responses posted on the Boston BBB website. "All of the accounts that West Bay Acquisitions, LLC attempts to collect on have been verified by the client to be valid debts."
