Class-Action Lawsuits
In over a dozen class-action lawsuits, leasing companies have been accused of violating consumer lending laws by charging excessive early-termination penalties on leases. According to plaintiffs’ attorneys, leasing companies are not allowed to collect more than three times the monthly payment as a penalty. In many cases, companies were making their customers pay penalties of $4,000 to $5,000 (or more), even though the monthly payments were only $300 to $400.
At the time this book was being completed, one of these lawsuits was pending against Ford Motor Credit Co. The original attorney for the plaintiffs had reached a settlement with Ford that appeared to limit the company’s total liability to well under $1 million, with the maximum number of eligible claimants limited to 100,000.
Even though the suit only pertained to Ford’s early termination practices, the settlement appeared to protect the company—and its dealers—from any other claims or damages related to their leasing practices, by consumers who had previously entered into leases with Ford Motor Credit
Another law firm (with a similar suit) filed court papers objecting to the proposed settlement, saying that it was unenforceable because it attempted to waive consumers’ rights to recover damages suffered as a result of intentional, dishonest sales practices at Ford dealers.
Attorneys general from seven states also filed objections to the settlement, stating that it was unfair and inadequate because of its limits on restitution and its release of Ford against any other claims regarding its leasing practices. They also said that there were considerably more than one million potential claimants involved, and told the court that leasing abuses have victimized many who are unaware that they were cheated. After hearing the objections, the judge did not approve the settlement.