NEW YORK (CNN/Money) - Citigroup Inc. agreed Thursday to pay $240 million to settle predatory lending charges as part of the largest consumer protection settlement in the history of the Federal Trade Commission.

Citigroup (C: down $1.15 to $27.96, Research, Estimates), the world's largest financial services firm, inherited a suit filed by the FTC against Associates First Capital Corp., which Citigroup acquired for $27 billion in November 2000.

Predatory lending generally is defined as taking advantage of consumers with poor credit histories through exorbitant interest rates, deceptive marketing tactics and abusive debt-collecting practices.

The FTC lawsuit filed in the Northern district of Atlanta claimed Associates First Capital used deceptive marketing practices to induce consumers to refinance existing debts into home loans with high interest rates, costs and fees.

"The Commission will not tolerate the fleecing of subprime borrowers through deceptive lending practices such as the packing of unwanted credit insurance on consumers' loans," FTC Chairman Timothy Muris said.

The FTC said its suit will provide $215 million to consumers who bought credit insurance in connection with loans made by Associates First Capital between December 1, 1995 and November 30, 2000.

Settlement of a separate class action lawsuit filed in California will provide $25 million to consumers whose mortgages were refinanced by Associates First Capital during the same time period.

"We are pleased to resolve the FTC's lawsuit regarding past lending practices of the Associates and appreciate its recognition of our efforts to raise consumer lending standards," said Citigroup President Robert Willumstad in a prepared statement. "When we bought Associates we found certain unacceptable practices that needed to be changed. We are confident that today's settlement provides redress to those former Associates customers who were harmed. We're gratified this matter is behind us."

Citigroup must also provide documents to the FTC detailing steps it has taken to stop the predatory lending practices, the commission said.

The settlement is contingent of approval of the federal district court in Atlanta and the California court.