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Attorney General Bob Butterworth
Florida Attorney General Office

News Release


November 2, 1998

MAY DEPARTMENT STORES TO PAY $22 MILLION FOR IMPROPER COLLECTIONS

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.