NOTICE: This is an archived press release. Information contained on this page may be outdated. Please refer to our latest press releases for up-to-date information.

Post date: June 10 2004

States Reach Settlement With Ford Motor Credit Co.

Attorney General Spitzer today joined with 37 states to announce a settlement with Ford Motor Credit Corporation and hundreds of auto dealers across the nation that will provide restitution to consumers who were overcharged during the 1990s when they terminated their auto leases early to purchase leased cars.

The settlement requires Ford Motor Credit and over 1,300 participating Ford and Lincoln Mercury dealers, including 69 dealers in New York State, to pay over $6.2 million in legal fees and costs. Dealers in New York State collectively will pay nearly $350,000 and Ford Motor Credit agreed to pay $500,000 as costs.

Consumers eligible for restitution - those who terminated their leases early between 1991 and 1999 to purchase leased cars and who did not receive a pay-off quote directly from Ford Motor Credit - may be eligible for $100 refunds. It is estimated that approximately 150,000 individuals across the nation will be eligible for restitution.

"This settlement will provide redress for those consumers who were overcharged when they exercised their right to terminate an auto lease early in order to purchase the vehicle," Spitzer said.

The settlement involves Ford Motor Credit's "Red Carpet" leasing program which came under scrutiny by the states when investigators discovered that early termination of vehicle leases resulted in undisclosed and unauthorized charges being added to the lease pay-off quote to consumers. These charges were, in fact, sometimes higher than the actual balance owed on the lease.

Dealers would discharge the lease obligation to Ford Motor Credit, but would keep the extra amount charged to consumers as additional profit on the purchase of the leased car. Individuals who agreed to this amount were usually unaware that a fee was "packed" into the pay-off amount because the figure was provided by their dealer instead of coming directly from Ford Motor Credit.

Ford Motor Credit has agreed to change its Red Carpet lease contract language nationwide to clearly explain a consumer's rights when terminating a vehicle lease early. Although Ford

Motor Credit does not offer auto leases in New York State at this time, in the event it recommences leasing, Ford Motor Credit and its authorized Ford and Lincoln Mercury dealers will adopt the new contract language.

Joining Spitzer in settling the investigation into Ford Motor Credit are the following states: Alabama; Arizona; Arkansas; Connecticut; Florida; Georgia; Hawaii; Idaho; Illinois; Indiana; Iowa; Kansas; Kentucky; Louisiana; Maine; Maryland; Massachusetts; Michigan; Minnesota; Mississippi; Missouri; Nebraska; Nevada; New Jersey; North Carolina; Ohio; Oklahoma; Oregon; Pennsylvania; Rhode Island; South Carolina; Texas; Utah; Vermont; Virginia; Washington; and Wisconsin.

Ford Motor Credit will contact directly consumers who terminated their leases early between 1991 and 1994 and who may be eligible for restitution. Other consumers who terminated leases early between 1995 and 1999 may also participate by calling the third-party administrator of the settlement at (800) 221-3312 or by going to its website at

This case was handled for New York State by Special Assistant Attorney General Stephen Mindell and Assistant Attorney General Herbert Israel of the Consumer Frauds and Protection Bureau.


For Adobe PDF files you can download Adobe Reader from Adobe Systems.