May 6, 2011
Jefferson City, Mo.— Attorney General Chris Koster today announced Missouri, along with a number of other states and the District of Columbia, has reached a settlement with the liquidating trustee, Bankruptcy First Term Lenders Liquidating Trust, handling the bankruptcy of Hollywood Video and Movie Gallery.
Koster said following the bankruptcy, former customers of the stores from across the country complained that a third-party collection agent reported negative credit information to credit bureaus without giving the consumers notice or an opportunity to challenge the information. He said consumers had no idea they had credit damage until they were denied credit or were only approved for limited credit, and many denied owing any money at all.
Koster said his office helped negotiate a nationwide settlement with the liquidating trustee that requires the negative information be removed from consumers’ credit reports.
“Consumers have a legal right to either pay or dispute any debt,” Koster said. “These consumers were never given the opportunity to act before discovering their credit had been seriously damaged. This is a serious situation, and Missouri and other states took appropriate action.”
Under the agreement, the trustee must withdraw previously filed negative credit reports and submit no further credit reports; collect no fees or interest charges on any debts; not bill consumers for a late fee plus the price of items allegedly not returned; comply with the Fair Debt Collection Practices Act; and assist the attorneys general in efforts to recover collection fees that consumers inappropriately paid.