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Hollywood Video debt collection letters causing problems for thousands

Posted by Mitch Lipka  April 3, 2012 09:35 AM

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Q. I received a notice in the mail stating that I owe $28.74 to the “Legal Successor of Hollywood Video/Movie Gallery Inc. and that debt has been placed with Universal Fidelity LP, a national collection agency. My credit score is excellent. I have never received a prior notice that I owed any money to Hollywood Video. I was a customer of Hollywood Video and left them in 2006 for Netflix. The notice says I rented three movies in 2009. I hate to pay for something that I have no responsibility for, but for about $29, should I just do it to protect my credit?

Lisa Karol, Pembroke

A. Short answer: No.

If you’re sure you didn’t watch those movies – and you certainly seem to be – don’t pay for them. On Universal Fidelity’s website is an email address to file an appeal of the debt. Object to the collection notice and that’s it. It isn’t usually that simple.

Collection of old debt on the books of Hollywood Video, which filed for bankruptcy and shut down in 2010, has been a big problem for a lot of consumers. The original, very aggressive attempt to collect – those who owed a few dollars of late fees were having credit reports tarnished - led to action by all 50 attorneys general and a settlement that changed the way the debt could be collected.

One of the changes is that collection agencies working on behalf of the bankruptcy court, such as Universal Fidelity, can no longer report unpaid debt to a credit agency. Nor can they add interest, additional late fees, or collection charges. Still, thousands of consumers have complained about attempts to collect these old debts, which many have said they didn’t owe.

About 4,000 have complained to Universal Fidelity after getting notices, according to Paul Farinacci, the company’s chief executive. About 40,000 of the 400,000 accounts that Universal Fidelity is pursuing have paid outstanding bills, he said.

“The one hurdle we haven’t been able to get over are these complaints that ‘I don’t owe this. I don’t remember,’” Farinacci said. “If a consumer truly believes they don’t owe this, they should dispute it. If you owe you should pay it, if you don’t, you shouldn’t.”

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About the author

Mitch Lipka is one of America's leading consumer journalists and advocates. He is an expert in product safety, recalls, scams, and helping consumers get out of jams. He is a nationally known consumer columnist and runs TheConsumerChronicle.com. He lives in Worcester. You can find him on Facebook or reach him at ConsumerNews@Aol.com

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