COEUR d'ALENE - A nationwide settlement involving Hollywood Video will benefit thousands of Idaho consumers who have outstanding rental accounts with the bankrupt business, Attorney General Lawrence Wasden said today.

Wasden's office received more than 30 complaints alleging that collection agencies were attempting to collect excessive fees from former Hollywood Video customers and reporting negative account information on customers' credit reports.

"Consumers have rights under debt collection laws, including the right to dispute a debt," Attorney General Wasden said. "In many instances, Idaho consumers reported not owing the debt that the collection agencies were trying to collect."

The problems started after Hollywood Video and Movie Gallery filed for Chapter 11 bankruptcy in 2010. Hollywood's approved plan created a liquidating trust to collect an estimated $244 million in outstanding debts reportedly owed by 3.3 million customers.

Hollywood Video in Coeur d'Alene, near Fred Meyer off U.S. 95 and Kathleen, closed last year.

The trust contracted with Credit Control Services, Inc., in Massachusetts, which subcontracted its collection responsibilities to National Credit Solutions of Oklahoma.

"Without first notifying consumers about their delinquent accounts, the collection agencies reported consumers' accounts to credit reporting agencies," Wasden said. "Because of the collection agencies' practices, consumers had difficulties obtaining new credit and received lower credit scores. This settlement will help repair consumers' damaged credit reports."

The settlement agreement, filed in the U.S. Bankruptcy Court for the Eastern District of Virginia, requires the liquidating trustee to rescind all previously filed negative credit reports and prohibits the trustee from reporting consumers' debts to credit reporting agencies. The trustee also agreed that:

• No interest will accrue on consumers' debts.

• No collection fees will be collected from consumers.

• If consumers' debts are sold to anyone else, they must be sold under a contract requiring the purchaser to be bound by the same obligations.

• Consumers will not be billed for both a late fee and the full price of items that were not returned. For accounts that include both a late fee and a charge for a damaged, late, or never-returned product, the trustee will collect the lesser charge.