Circuit City to pay $11.7M to settle lawsuits

Richmond-based electronics giant Circuit City Stores, Inc. has agreed to pay about $11.7 million to settle lawsuits and consumer complaints in 43 states for allegedly using illegal debt-collection practices to get payments from credit card customers.

The settlement is on behalf of Circuit City subsidiary, First North American National Bank (FNANB), which oversaw consumer credit plans and credit card accounts for the retailer.

According to the office of Ohio Attorney General Betty D. Montgomery, FNANB’s debt-repayment contracts weren’t properly filed in bankruptcy courts. Such contracts must be filed in court and reviewed by a judge, a safeguard meant to insure that companies aren’t pushing customers to pay off debts that could be forgiven in bankruptcy proceedings.

Circuit City spokesman Morgan Stewart would not comment on the matter other than to say “the settlement is consistent with those reached by other credit providers” who fail to file the contracts.

The agreement calls for the company to pay a total of about $6 million in restitution to more than 21,000 customers nationwide; pay the state attorneys general $3.7 million to fund consumer education programs; and write off about $2 million in existing debts of card-holders, Montgomery announced Nov. 19.