Ford Motor Credit Settles Leasing Case

LANSING, Mich. June 11, 2004; Tim Martin writing for the AP reported that thousands of Ford Motor Credit customers could receive $100 each as part of a settlement related to the company's vehicle leasing practices.

The agreement likely will cost Ford Motor Credit and dealerships more than $6 million, the company said Thursday, although Ford's estimates differed from some projections provided by attorneys general of the 39 states expected to be involved in the deal. Costs would include an estimated $1 million in restitution fees to customers, Ford said.

Dealerships will cover most of the costs, Ford Motor Credit spokesman Daniel Jarvis said.

The settlement affects certain Ford customers who ended a lease before its expiration date and subsequently bought the vehicle. The company's "Red Carpet" leasing program came under scrutiny when investigators found that the customers faced charges that were sometimes higher than the actual balance owed in the lease.

Dealers notified customers of the balance due, which included an additional charge not owed to Ford Motor Credit under the terms of the lease. The dealer would keep the extra charged to customers, who were unaware of the correct figure, Michigan Attorney General Mike Cox's office said.

Ford Motor Credit will notify 150,000 customers nationwide of the settlement, but estimates that less than 10 percent of them will be eligible for restitution.

"Through this settlement, Ford Motor Credit and its dealers are proactively correcting these leasing practices," Cox said. "Ford Motor Credit and the participating dealers have taken the steps necessary to resolve the confusion over their leases and provide redress for affected customers."

The company said it changed its policies in 1995.

Jarvis said the confusion in costs arose when customers decided to buy the vehicles they had previously leased. That made the transaction a negotiation between the dealer and the customer, he said.

"There were no allegations that Ford Motor Credit did anything wrong," Jarvis said.

Ford will send a notice to customers affected from 1991 through 1994. Customers who are not notified but believe they could be eligible may contact the administrator of the settlement at 1-800-221-3312.