Attorney General Bob
Butterworth
Florida Attorney General Office
TALLAHASSEE
-- The May Department Stores Company will pay $22 million, including $125,000
to 160 Florida consumers, to settle allegations of unlawful debt collection,
Attorney General Bob Butterworth announced
today.
Under an agreement with Florida and 20
other states, the company will pay $15 million to more than 30,000 consumers
nationwide. The company also will pay $7 million to the states, with Florida
receiving $33,600 of that amount to cover investigative
costs.
The states accused May of soliciting
customers who filed for bankruptcy to sign contracts agreeing to repay their
debts rather than have them dismissed by the bankruptcy courts. May then
failed to file those agreements with the courts as required by law, the states
said. The company owns numerous retail stores throughout the country, including
Lord & Taylor in Florida.
"Agreements reaffirming consumer debt
can be proper if they are filed with the bankruptcy courts," Butterworth
said. "Such filings allow the courts to ensure that consumers are receiving
the protections they seek through bankruptcy proceedings."
Consumers who entered reaffirmation
agreements with May will have their debts stricken and the company will waive
any rights to repossess merchandise. Consumers also will be reimbursed any
money paid on the reaffirmed debt, plus 8 percent interest, as well as an
additional payment of 10 percent of the amount paid on the reaffirmed debt.
In addition, consumers will be reimbursed finance charges and penalties charged
by May.
The agreement with May is the latest
to stem from a multi-state investigation of debt collection practices. Last
year, Sears, Roebuck and Company agreed to pay $165 million to settle allegations
of improper debt collection. Earlier this year, GE Credit and Montgomery
Ward Credit agreed to pay $60 million and Federated Department Stores Inc.
agreed to pay more than $7.5 million to settle similar
allegations.
In addition to Florida, states entering
the agreement with May include Arizona, California, Colorado, Connecticut,
Georgia, Illinois, Indiana, Maryland, Massachusetts, Missouri, Nevada, New
Mexico, New York, Ohio, Oklahoma, Oregon, Pennsylvania, Rhode Island, Texas
and Virginia.
The case was handled for Florida by Chief
of Multi-State Litigation Jack
Norris.