SEATTLE -- More than 150,000 consumers nationwide who leased vehicles through Ford Motor Credit Co. and Ford and Lincoln Mercury dealers may be eligible for reimbursements of up to $100 through a multi-state settlement announced today by Attorney General Christine Gregoire.
Consumers in Washington and 38 other states who terminated their leases early and either purchased the car and kept it or traded in on another car were sometimes overcharged by dealers. An investigation determined the language in leasing contracts regarding early termination was often unclear.
"This settlement will require dealers to provide consumers with better information so they can avoid being stung with additional charges if they decide to terminate a lease agreement early," said Gregoire.
The settlement, filed in King County Superior Court, is the result of cooperation by Ford Credit and the 1,300 participating Ford and Lincoln Mercury dealers, who will pay $5.8 million to participate. Ford Credit will pay consumer restitution plus legal fees and costs. Forty-two Washington dealers agreed to the settlement, paying an average $3,500 each.
Consumers eligible for restitution under the settlement are those who had to rely on dealers to disclose the amount of money needed to terminate their leases early and either buy or trade in their cars.
The so-called "Red Carpet" leasing program came under scrutiny when state investigators discovered that early termination of vehicle leases resulted in dealer charges that were sometimes higher than the actual balance owed to Ford Motor Credit to pay off the lease early. Dealers allegedly pocketed the extra money charged to unsuspecting consumers. The dealers provided the payoff figure, not Ford Credit.
As a result of the settlement, Ford Credit along with Ford and Lincoln Mercury stores will change their lease contract language to clearly explain a consumer's rights when terminating a vehicle lease early.
Consumers who leased vehicles between 1991 and 1994 will receive direct notice from Ford Credit concerning possible restitution. Others who leased vehicles after 1994 may also participate by calling the settlement administrator at 1-800-221-3312.