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GE to reimburse consumers
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August 7, 1998: 1:30 p.m. ET
Consumer finance unit will pay $60M-$100M to settle FTC charges
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NEW YORK (CNNfn) - General Electric Co. agreed to refund between $60 million and $100 million to consumers to settle charges that its financing divisions misled individuals who filed for bankruptcy protection, the Federal Trade Commission said Friday.
The FTC, in conjunction with state attorneys general from all 50 states, reached the settlement with GE Capital Corp. and its wholly-owned subsidiary, Montgomery Ward Credit Corp. GE Capital's credit card business serves about 80 million people.
The government alleged that from Jan. 1, 1993, until June 30, 1997, GE Capital regularly sought out consumers who filed for protection under Chapter 7 of U.S. Bankruptcy Code to persuade them to "reaffirm" credit account debts.
"They were misrepresenting to consumers that they would file the (reaffirmation) agreements in courts and that they were binding," said Howard Shapiro, agency spokesman.
In fact, in many instances GE Capital did not file the agreements or the bankruptcy courts did not approve them. The agreements, therefore, were not legally binding and the collection tactics were deemed illegal, the agency said.
GE Capital said it entered into the settlement to avoid protracted litigation costs, admitting no wrongdoing.
The Fairfield, Conn.-based company (GE) doesn't believe the settlement will materially affect earnings.
Under the proposed settlement, the FTC reserves the right to file an action in U.S. District Court if the agency believes that GE Capital has failed to fulfill its obligations.
The FTC worked closely with Missouri Attorney General Jay Nixon, who led the effort for the states. 
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