In action that could reverberate throughout the consumer finance industry, attorneys in Georgia and Alabama have filed massive litigation against World Acceptance Corp. and 30 other companies, claiming truth-in- lending violations.

Two companion suits for which class-action status has been sought say World Acceptance and the other companies violated federal and state laws by failing to disclose "nonfile insurance" premiums as a fee or finance charge.

Consumer finance companies routinely require customers for small loans to pay these premiums, some of which are low as $7, in lieu of the lender having to record a lien on the customer's collateral. The two suits, filed in federal district courts in Columbus, Ga., and Montgomery, Ala., assert that these premiums are actually finance charges that should be disclosed when calculating a loan's annual percentage yield.

Greenville, S.C.-based World Acceptance, one of the nation's largest small-loan companies, with $89 million of loans outstanding, announced the litigation last Wednesday. The company's stock immediately dropped $1 to $27 a share.

"We don't know whether this suit is going to be material to World or not," said chairman and CEO Charles D. Walters. "But if we're going to err, we're going to err on the side of being conservative. Rather than our investors learning about it as it seeps out, we'd rather have them hear it from us."

Litigation of this sort - alleging failure to disclose certain contract items - has long been the bane of consumer finance companies, which are vulnerable to criticism because of the high interest rates they typically charge.

Ford Motor Co.'s Associates Corporation of America, which is the lead defendant in the World Acceptance Corp. case, is being plagued by separate litigation for allegedly encouraging mortgage brokers to charge higher- than-normal interest rates.

Atlanta-based Fleet Finance Co. also suffered years of bad publicity and financial losses because of complaints about its home equity lending practices.

More recently, auto lender Mercury Finance Co. was hit by a $50 million punitive damages award in Barbour County, Ala., a town which has become notorious for runaway jury awards in consumer finance cases. Mercury finally settled the suit for less than $1 million, after a higher court reduced the award to $2 million and accepted its motion for a new trial.

Seventeen of the 29 plaintiffs in the Montgomery case, called Nobels v. Associates Corp. of North America, are from Barbour County.

"This is just a continuation of the aggravating class-action suits that are emanating out of the state of Alabama," said Mr. Walters of World Acceptance. "The plaintiffs' bar is just having a field day jumping on companies."

The plaintiffs' law firms in both the Montgomery case and the one in Georgia, which is known as Jordan v. Avco Financial Services, consists of a team: Edmond & Vines of Birmingham and Pope, McGlamry, Kilpatrick & Morrison of Columbus, Ga.

The lead attorneys on the litigation, Lanny S. Vines and C. Neal Pope, could not be reached for comment.

Defendants in the two cases would appear in any Who's Who of consumer finance. They include not only World Acceptance, Associates Corp., and Fleet, but also Beneficial Corp., Household Finance Corp., Mercury Finance, and the consumer finance subsidiaries of NationsBank Corp. and Norwest Corp.

Mr. Walters said World Acceptance, for one, intends "to defend our position vigorously."

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