A federal judge here has dismissed a settlement between a unit of Associates First Capital Corp. and 53,000 borrowers who claimed the finance company illegally paid bounties for high-rate loans. In his ruling Monday, U.S. District Court Judge George O'Toole said the borrowers were too dissimilar to constitute a class. The decision effectively dismantles a four-year-old class action against Ford Consumer Finance that was expected to cost Associates $10 million.

Ford Consumer Finance agreed in 1996 to settle the suit by paying $50 cash or $250 credit toward a new loan to each borrower in the class. At the time, the consumer watchdog group Neighborhood Assistance of America said the settlement was too low.

Judge O'Toole said borrowers would have to prove case-by-case that Ford broke the law by giving brokers more money for pushing certain products or higher-interest loans. He noted that using brokers and paying them fees was not itself illegal.

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