Consumer Alert

Alaska Joins Settlement with Movie Gallery, Inc.

Alaska, with 49 other state attorneys general and the District of Columbia, joined a settlement resolving allegations of unfair debt collection practices for Hollywood Video and Movie Gallery customer accounts. Movie Gallery, which owned Hollywood Video, operated seven stores in Alaska before filing for bankruptcy in 2010.

The agreement with Movie Gallery, Inc.'s bankruptcy trustee gives immediate relief to customers who may have had problems with the now-defunct movie rental company. Many customers complained that a third-party collection agent reported negative credit information to credit bureaus about alleged debts owed to Movie Gallery without giving consumers prior notice or opportunity for challenge. This resulted in alleged credit rating damage to some customers, many of whom did not realize they had credit damage until they were denied credit or were given limited credit.

The agreement calls for the company to rescind all previously filed negative credit reports, prohibits reporting of non-payment of alleged debts to any credit reporting agencies, prohibits interest from accruing on alleged debts and prohibits collection fees on future collections.

The settlement applies only to Movie Gallery and Hollywood Video but not to any third party debt collectors.

Consumers can file complaints about unfair debt collection practices or other unfair trade practices with the Consumer Protection Unit of the Alaska Attorney General's Office.

Consumer Protection Unit
May 2011