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MSNBC: Video late fee? Forget about that mortgage.

Toe Jam

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Is it a scam? Is it just a big misunderstanding? Or has a collection agency in Oklahoma broken the law?

Hundreds of thousands of people who rented movies from Hollywood Video or Movie Gallery had collection notices put in their credit files without any notice or chance to contest the charges.

Both companies filed for bankruptcy last year and their outstanding debts were turned over to National Credit Solutions (NCS) in Oklahoma City.

Many of those people who found collection notices in their files claim they don’t owe money to either company.

A few weeks ago, Seattle teacher Martin Piccoli had the credit limit on his Discover Card slashed from $8,700 to just $600 because of an NCS collection notice he didn’t know about. The bill was $166 for “overdue videos and late fees.”

“I was just blown away,” he says. “I can firmly state that I owed them nothing and that I never received any communication from them: no phone calls, no mail, absolutely nothing.”

When Piccoli contacted NCS, the representative was able to recite the videos he had rented in 2009 and 2010. He recognized the titles, but disputed the late fees.

“Indeed, if I had owed late charges on the 2009 videos, Hollywood Video would not have let me rent the other videos in 2010,” he wrote in his complaint to the Washington state attorney general’s office.

Piccoli assumed that if Discover had discovered the negative information in his file, others would, too. The NCS representative said she could make that bad mark go away if he paid on the spot.

“I felt like I was being mugged in a way,” Piccoli says.

He paid, and the collection notice was gone the next day.

Piccoli is one of 48 people who have filed similar complaints about NCS with the Washington attorney general’s office.

“We’re very concerned given the number of complaints and the nature of the complaints,” says Assistant Attorney General Mary Lobdell. “We want to make sure people are aware that this is going on, that they know their rights and how to deal with it.”

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