Attorney General Mike Cox announced today a multistate settlement with Ford Motor Credit regarding its leasing practices, impacting more than 150,000 Ford customers and bringing $485,500 to the State of Michigan in legal fees and costs.
"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."
Thirty-seven other states joined in the settlement involving Ford Motor Credit's "Red Carpet" leasing program, which came under scrutiny when a multistate group of investigators found that early termination of vehicle leases resulted in charges that were sometimes higher than the actual balance owed in the lease.
Dealers would notify 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 discharge the lease obligation to Ford Motor Credit but kept the extra amount charged to consumers, who were unaware of the correct payoff figure.
The settlement is the result of the cooperation of Ford Motor Credit and 1,300 participating Ford and Lincoln Mercury dealers, who will pay more than $6.2 million in legal fees and costs. Seventy-seven dealers in Michigan have committed to the reforms set forth in the settlement. Consumers who Ford Motor Credit notifies may qualify for a $100.00 restitution check from the company.
Ford has agreed to change its Red Carpet lease contract language to clearly explain a consumer's rights when terminating a vehicle lease early. The change involves not only Ford Motor Credit branches but also the practices at Ford and Lincoln Mercury stores.
Ford Motor Credit has also agreed to pay for the administration of the settlement and will send a direct notice to 1991 to 1994 consumers. Other consumers may participate by calling the administrator of the settlement at 1-800-221-3312 or by going online at www.gilardi.com/fordcreditrclagsettlement.
