More than two million credit-card customers of Home Depot and Lowe's could be eligible for $5 rebates under the terms of a $4 million class-action settlement regarding over interest charges on what were supposed to be interest-free purchases.
Lowe's and Home Depot were sued after customers discovered their monthly payments were applied to interest-free balances before regular purchases, which accrued interest charges.
The issuer of the credit cards, Monogram Credit Card Bank of Georgia, a unit of General Electric Corp. was also named in the suit.
Los Angeles Superior Court Judge Charles McCoy gave preliminary approval to the $4 million settlement and scheduled a final approval hearing for June 6, 2005.
The companies must notify their customers of the terms of the settlement, which gives every class member who lost money as a result of the payment allocations a $5 rebate on a purchase of $15 or more.
The lawsuit contended that customers were told they could defer interest charges for six months on certain store credit card purchases of more than $200. But they soon learned that payments were being applied toward the interest-free balance, while their regular purchases continued to rack up interest charges.
The companies also agreed to more fully explain to customers how their credit card payments are applied and to automatically apply payments against the interest-bearing balances first, unless customers choose otherwise.