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Home Depot, Monogram Credit Card Bank To Pay Connecticut $672,000

"No Interest, No Payment" Offers Weren't What They Seemed

May 1, 2006

Home Depot • Customer Service • Credit Policies • Equipment Rentals • "Interest-Free" Promotions • HomeDepot.com • An Insider's View --- • Appliances • Bathrooms • Doors • Floors • Gift Cards • Generator • Home Heating • Kitchen Dept • Nursery & Gardening • Rebates • Roofing • Siding • Special Orders • Windows & Siding • Expo Design Center --- • Contractors' Advice --- News • Home Depot Sells Supply Unit As Home Construction Sags • CEO Nadelli Ousted with $210 Million Severance • Home Depot Buys a Bank • Home Depot, Monogram Credit Card Bank To Pay Connecticut $672,000 • Home Depot, Lowe's Settle Credit Card Suit • 6 Months "Interest-Free" Class Action

Home Depot and its banking partner have agreed to pay $672,000 to settle charges that its credit card payment practices unfairly increased interest costs for consumers in Connecticut.

Connecticut is the first state to reach a settlement with Home Depot and GE Capital over the practice, which affected consumers nationwide.

Under the settlement, Home Depot and the new owner of Monogram Credit Card Bank of Georgia, GE Capital Corporation, agreed to pay the state $350,000 and at least 8,000 Connecticut consumers $322,000 in restitution.

Home Depot periodically offers customers "no interest/no payment" purchases on the store's credit card. Consumers are charged no interest on a specific purchase for a certain time period -- typically a year to 18 months.

The store failed from 2000 to 2003 to properly inform many consumers that most of their payments would automatically be allocated toward the interest-free purchase.

As a result, many consumers who carried Home Depot credit card balances and took advantage of "no interest/no payments" promotions paid more interest than necessary. The chain also failed to fully disclose that consumers could change how their payment was allocated.

"What seemed like a great break became a big fake -- after Home Depot hammered more than 8,000 Connecticut consumers with extra interest costs," Attorney General Richard Blumenthal said. "Home Depot unfairly reaped revenue from consumers who trusted the company's 'no interest' pitch, only to be charged interest."

"The company failed to tell consumers that they could pay down interest-incurring debt first, saving themselves significant costs. The message: consumers deserve full benefit of the deals they are promised," said Blumenthal.

Consumers are receiving restitution ranging from pennies to $100, depending on the size of their balances and other factors.

The settlement forbids the companies from advertising their credit programs as "no interest/no payment" in the future, unless those credit programs truly are "no interest" and "no payment."

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