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Consumers File Class Action
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Three alleged victims of predatory lending have filed a national class-action suit in the Circuit Court of Cook County, Ill., accusing Household International and its subsidiaries, Household Finance Corporation and Beneficial Corporation, of a wide range of fraud and misrepresentation. Wall Street shrugged off the suit against Household, the nation's largest lender to consumers with poor credit. Analysts noted the company has taken action recently to prevent lending abuses. The class for the suit includes all borrowers induced to enter into secured loans to consolidate existing debt, an estimated 175,000 persons. It asks for rescission of the loans -- restoring interest paid and fees to the borrowers -- as well as for actual and punitive damages. Household made more than $45 billion worth of secured loans in the past three years. "Household has made a practice of making loans which hurt families and communities all across the country," said Maude Hurd, National President of ACORN, a homeowners group. "Household has stripped families of their major form of wealth - the equity in their homes - by targeting vulnerable people, deceiving them about the real costs and consequences of their loans, and trapping them in loans with high rates and high payments." On Feb. 6, ACORN and two victims of predatory lending filed a similar class-action suit covering borrowers only in the State of California. Among the borrowers named in the suit are Murelin and James Bell of Chicago. Murelin works as a teacher's aide and James is retired. Murelin received a live check in the mail from Household during a period when James went into the hospital for triple-bypass heart surgery. They needed money to pay the bills, and she cashed it. Household then consolidated this small, unsecured loan with the Bells' existing mortgage and other consumer debt into a secured loan for $98,508.43. In promoting the benefits of loan consolidation to the Bells, Household allegedly:
On Jan. 10, Household agreed to pay $12 million to settle California regulators' allegations that Household deliberately overcharged tens of thousands of customers. On April 23, the 7th U.S. Circuit Court of Appeals in Chicago reversed a $25 million settlement of a class-action suit against Household and H&R Block. The decision removed a legal shield that had protected Household and Block from allegations they illegally gouged customers by providing "refund anticipation loans" at interest rates frequently exceeding 100 percent. Household and Block could face damages of up to $2 billion in Texas alone, the appeals court said. |
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