Los Angeles, December 2--More than two million people with credit cards from The Home Depot Inc. and Lowe's Companies Inc. could be eligible for $5 rebates under the terms of a court settlement of a lawsuit over the companies' credit card promotions.
The two home improvement retailers and the issuer of their credit cards, Monogram Credit Card Bank of Georgia, were named in a class-action lawsuit accusing them of misleading customers participating in promotions over the past four years that offered interest deferred credit card purchases.
Customers were told they could defer interest charges for six months on certain store credit card purchases over $200. But customers soon discovered that their credit card payments were being applied toward their interest-free balances, while their regular purchases continued to accrue interest, said Seattle attorney Nick Styant-Browne, who sued the companies on behalf of the chains' customers in November 2003.
Los Angeles Superior Court Judge Charles McCoy gave preliminary approval to the settlement on Nov. 17. McCoy set the date for a final approval hearing on June 6.
The judge also instructed the companies to begin notifying their customers of the terms of the settlement, which includes an agreement by the two retailers to give every class member who lost money as a result of the wrongful payment allocations a $5 rebate on a purchase of $15 or more.
Of the $4 million settlement, $2.5 million has been earmarked for the rebates, with the rest going to pay attorneys fees. If not enough customers follow through and take their refund, the settlement includes a provision that requires the defendants to establish a $2 million fund benefiting a consumer-related activity or group, Styant-Browne said.
"All defendants are bound by the terms, but my understanding is that the credit card provider is the defendant who is bearing the cost of the settlement," he said.
Home Depot and Lowe's also agreed to explain to their customers exactly how their credit card payments are applied and to automatically apply payments against the interest-bearing balances first, unless customers chose otherwise, Styant-Browne said.
