Knoxville man receives bill for late fees from bankrupt company

Knoxville man receives bill for late fees from bankrupt video rental company

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Universal Fidelity is trying to collect late fees on movies rented back in 2009 and 2010. Universal Fidelity is trying to collect late fees on movies rented back in 2009 and 2010.
Consumers are not supposed to be harassed by collection agents either. But Zonar said the agent he called wasn't very sweet. Consumers are not supposed to be harassed by collection agents either. But Zonar said the agent he called wasn't very sweet.
"The settlement between the state attorneys general and Hollywood Video mandates that they have to be furnished proof and the customer has the right to contest it," said Tipton. "The settlement between the state attorneys general and Hollywood Video mandates that they have to be furnished proof and the customer has the right to contest it," said Tipton.

By DON DARE
6 On Your Side Consumer Investigator

KNOXVILLE (WATE) - With Halloween a couple of days away, customers of a store that no longer exists are being haunted by the company's debt collector for not paying late fees.

When Hollywood Video went out of business in 2010, it had only one real asset: unpaid fees. About 3 million former customers owed money to the company.

So the bankrupt video business hired a collection agency, and like a bad horror movie, debt collectors are trying to cash in on what consumers call bogus bills.  

In West Knoxville, Joey Zonar, like a lot people, enjoys watching videos on his wide-screen TV.

For years he used to rent DVDs from Hollywood Video at a stand-alone building where a gas station is now located.

Hollywood Video went out of business and declared bankruptcy in 2010. Now, the company wants to get all it can from former customers.

"I have a bill from a legal successor of Hollywood Video stating that I have a bill of a total balance due of $17.16," said Zonar.

Zonar said the $17 that Universal Fidelity is trying to collect are late fees for two videos - the movie "Twilight" rented in April 2009 and "Miss March" rented in January 2010.

"Typically if you have a late fee, you are not able to rent another movie until you pay the late fee and this is 7 months from DVD to DVD," said Zonar.

As best as he remembers, Zonar said from time to time was assessed some late fees, but claims he always paid them.

"I went there frequently -  two to three times a month - and knew the people who worked there and never had a problem or issue," he said.

At the Better Business Bureau, 6 On Your Side showed Jerry Tipton the bill that Zonar received.

"Wow. $17.16," said Tipton. "That's amazing."

The BBB said the results of a class-action lawsuit are clear. Former Hollywood Video customers like Joey Zonar should not be pushed into paying bills they do not owe.

In that lawsuit, Universal Fidelity promised it would not report debts to credit bureaus. This was a settlement with all 50 state attorneys general.

It also agreed it would not collect fees or interest on unpaid bills and that there would be an investigation first.

"The settlement between the state attorneys general and Hollywood Video mandates that they have to be furnished proof and the customer has the right to contest it," said Tipton.

He said consumers are not supposed to be harassed by collection agents either. But Zonar said the agent he called wasn't very sweet.

"She was totally controlling the conversation, not letting me speak, pretty much being a bully saying, 'Pay this bill. Pay this bill. You have to pay this bill.'," he said.

The collection notice Zonar received said he has 30 days to dispute the validity of the debt. If he doesn't write a letter, it's assumed his debt is valid.

Within hours after 6 On Your Side visited Joey, he wrote a letter to dispute the charge. 


If you have a consumer issue, call the 6 On Your Side Hotline at 865-633-5974 or email ddare@wate.com.

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