In February 2010, Movie Gallery (owner of Hollywood Video) filed for bankruptcy. Though the movie rental stores fell like dominoes, Movie Gallery was determined to collect late fees and replacement costs for lost movies and games. According to an AP report in the Washington Post, Movie Gallery engaged the services of National Credit Solutions, which used a sledgehammer approach to debt collection. Seemingly, National Credit Solutions was merciless in reporting – or threatening to report – movie rental late fees to credit reporting agencies. Consumers can pay a steep price when their credit reports get dinged, in that they’re charged higher interest rates to borrow money, or can be denied housing or employment.

Montana Attorney General Steve Bullock filed suit against National Credit Solutions. Bullock not only pointed out the credit bureau issue, but also alleged that the debt collection agency didn’t give consumers an opportunity to dispute the debt, and then attempted to charge collection fees in addition to the money owed. As a result, Movie Gallery’s bankruptcy trustee negotiated a settlement with attorneys general from all 50 states, plus the District of Columbia. As part of the settlement, all related negative credit reports must be reversed, and Movie Gallery is prohibited from submitting or threatening to submit negative credit reports, is prohibited from collecting most additional fees, and can only try and collect certain valid debts.

In a press release issued by Attorney General Bullock’s office, he said, “In today’s economic environment one black mark on your credit report – even one that’s illegitimate and reported by an irresponsible company — can prevent a hardworking family from buying a new home. Today, we made sure that wouldn’t happen and that’s great news for Montana consumers.”