Roughly 8,000 Home Depot credit card holders in Connecticut are going to be getting a small rebate from the giant “home improvement” retailer — but it’s not because of their everyday low prices. It was announced several days ago that Home Depot had settled a lawsuit brought against it by state Attorney General Richard Blumenthal, who sued the company for unfairly charging their credit card holders with extra interest costs. The 8,000 shoppers who used their orange credit card will get a total of $322,000 in ‘restitution” payments, and the state of Connecticut will get $350,000 to the general fund to help cover costs of the investigation. The other defendant in the lawsuit was GE Capital which issued the credit cards. According to media accounts, Home Depot would offer its customers a “no interest/no payment” purchase if they used their Home Depot credit card. The no interest deal would apply to a specific purchase, usually for a specific period of 12 to 18 months. But for at least three years, 2000 to 2003, the retailer did not inform its card holders that most of the payments they made on their cards were going to the interest-free purchases. This means that many Home Depot customers were paying off the interest free purchases, but carrying card balances on purchases not made interest free, and so were paying more interest than they would have if their payments had gone to the purchases that were not interest-free. Home Depot also neglected to tell its cardholders that they had the right to change how their payments were being allocated. As is typical in these cases, Home Depot admitted to no wrong-doing, but said it agreed to the settlement to avoid lengthy and costly litigation. By doing so, they also avoided weeks of nasty headlines. “What seemed like a great break became a big fake, after Home Depot hammered more than 8,000 Connecticut consumers with extra interest costs,” Blumenthal told the Boston Globe. Most of the settlements going to consumers will be quite small — less than $100. The agreement also forbids Home Depot from describing their credit programs as “no interest/no payment,” unless those programs are actually “no interest” and “no payment.” Home Depot took the opportunity to charge that Blumenthal had “mischaracterized” the Home Depot’s previous credit program that they phased out more than two years ago. “The program saved many customers a great deal of money and was commonly used by other major retailers,” the retailer said. “The Home Depot is committed to providing fair, competitive and convenient credit programs.”
This lawsuit is one of a number of similar Home Depot credit card cases in other states. Consumers who used their Home Depot card, got nailed for higher interest rates than necessary. Home Depot says they are committed to “fair” credit card programs, and they were also committed to paying $672,000 to get this case out of the headlines.