Dearborn, MI - based Ford Motor Credit Company (Ford Credit), the auto
financing subsidiary of the Ford Motor Company has agreed to pay the Federal
Trade Commission $650,000 for alleged violations of the Equal Credit Opportunity
Act. According to the FTC, Ford Credit improperly failed to combine the
incomes of unmarried joint applicants, resulting in less favorable terms
for such applicants compared to married couples.
The settlement is one of the largest ever for ECOA violations. In May
of last year, Philadelphia, PA - based Franklin Acceptance Corporation
paid $800,000 in similar circumstances, along with Fair Credit Reporting
Act violations. The Ford Credit settlement is to be used to compensate
credit applicants who were adversely affected by the discrimination during
the period from May 1994 to August 1995.
The ECOA and its implementing Regulation B prohibit discrimination against
an applicant for credit on the basis of race, color, religion, national
origin, sex, marital status, or the fact that an applicant's income is
derived from public assistance. Regulation B specifically prohibits discounting
or refusing to consider income on the basis of marital status.
The complaint and consent decree were filed in the United States District
Court for the Eastern District of Michigan on December 9, 1999.
Chicago, IL-based Bank One Corp, the second-largest credit card issuer
in the country, announced that chairman and CEO John B. McCoy "has decided
to retire" after 15 years. Company president Verne Istock is now temporary
acting CEO pending selection of a permanent replacement for McCoy.
In August 1999, the $260 billion-asset Bank One announced declining profits
at its credit card-issuing unit, First USA, partly as a result of extensive
use of low introductory "teaser rates" on new accounts. Once boasting
growth of 20 percent, First USA has experienced reduced profit margins
as a result of low introductory and fixed rates on credit cards, as well
as expensive acquisitions, such as First Chicago, NBD in 1998.
While Bank One's stock fell 47 percent after the August announcement,
Wall Street pumped it up by more than 11 percent after the McCoy departure
was disclosed, amid wide speculation that Bank One, or at least First
USA was a target for acquisition, possibly by number-one card issuer Citibank.
Sub-prime card issuer Beaverton, OR-based Renaissance Holdings is being
acquired by Prospect Heights, IL-based issuer Household International
for $300 million.
San Francisco-based Nextcard has announced its first non-Internet advertising
campaign, with ads to appear in the Wall Street Journal, New York Times,
and other business publications. Television spots will appear next year.
Riverwoods, IL-based Discover announced that accounts are up more than
five million in the past year, which they attribute to merchant initiatives
and improved branding. They had discontinued the Bravo brand, and introduced
Discover Platinum in that time period.
Redmond, WA-based Microsoft has finally released Windows For Smartcards,
and building kits will be available to software developers next month.
Look for manufacturers to start including Microsoft-driven smart card
readers for Microsoft-driven ecommerce applications in PCs next year.
New York-based Standard & Poor's announced that charge-offs on bank
credit cards were 5.5% of receivables last month, down from 6.2% a year
ago, and attributed the improvement to a stronger economy and tighter
approval guidelines among card issuers.