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.
The 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.