Federated To Settle Credit Card Lawsuit

Federated Department Stores Inc. reached a tentative settlement to repay about $4.3 million to credit card customers who sued the company for improperly collecting payments.

A U.S. District Court judge in Massachusetts gave preliminary approval Thursday to the proposed settlement of the $4 million class-action lawsuit against Federated, the largest department store group in the country.

At issue was what are known as reaffirmation agreements, in which a debtor in bankruptcy agrees to repay a debt. Companies have a right to renegotiate the debts of customers who seek bankruptcy protection, but the agreements must be approved by a judge.

Federated said it found that some of its customers had been making such payments although the agreements were filed improperly.

About 9,800 customers were plaintiffs in the suit.

Federated, with annual sales of more than $15 billion, operates more than 400 department stores and 150 specialty stores in 36 states under the names of Bloomingdale’s, The Bon Marche, Burdines, Goldsmith’s, Lazarus, Macy’s, Rich’s and Stern’s.