GE Capital said it has agreed to settle lawsuits accusing it of wrongfully collecting payments from bankrupt debtors.
The General Electric Co. financial services arm, which owns private- label and MasterCard-issuing operations, faced charges from the Federal Trade Commission, state attorneys general, and private citizens in a class action.
GE Capital said its payments of $100 million to 28,000 debtors would not affect earnings because of a reserve set aside last year. Also in 1997, GE Capital made cash payments to 28,000 after reviewing consumer accounts that went bankrupt from January 1993 through June 30, 1997.
GE Capital spokesman John Oliver said most customers getting payments were holders of Montgomery Ward private-label cards. The company's MasterCard portfolio was minimally affected, he said.
Last year, Sears Roebuck & Co. paid more than $178 million to bankrupt customers. Sears had illegally collected $412 million of so-called reaffirmed debt and had to record a $320 million charge against earnings.