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FEDERATED DEPARTMENT STORES, INC. TO PAY IN EXCESS OF $7.5 MILLION AS PART OF MULTI-STATE SETTLEMENT FOR IMPROPER DEBT COLLECTION PRACTICES

PRESS ADVISORY

FEDERATED DEPARTMENT STORES, INC. TO PAY IN EXCESS OF $7.5 MILLION AS PART OF MULTI-STATE SETTLEMENT FOR IMPROPER DEBT COLLECTION PRACTICES

February 17, 1998

ATLANTA - Attorney General Thurbert Baker and the Administrator of the Governor's Office of Consumer Affairs, Barry W. Reid, announced today that Federated Department Stores, Inc., owner of The Bon Marche, Bloomingdales, Burdines, Lazarus, Rich's, Goldsmith, Macy's East, Macy's West, and Stern's, has agreed, in a Consent Judgment filed today in the Superior Court of Fulton County, to pay in excess of $7.5 million as part of a multi-state settlement for improper debt collection practices. When the debt write-off and the benefits are included, this settlement is worth $11 million. "I am very pleased with this settlement," says Attorney General Thurbert E. Baker, "and am happy that those consumers who were affected by Federated's impropriety will receive just restitution."

The investigation confirmed that Federated enticed and threatened customers who filed Chapter 7 bankruptcy to sign a contract agreeing to repay their debt rather than have it dismissed in bankruptcy. Federated then failed to file those agreements with the Bankruptcy Court as required by law. The practice has been going on for at least five years.

This investigation followed a similar case last year involving a multi-million dollar national settlement with Sears, Roebuck and Company for the same practices. The Attorney General and the Governor's Office of Consumer Affairs investigated the facts and negotiated the settlement on behalf of the State of Georgia with both Sears and Federated.

Nationwide there were approximately 13,302 consumers who were coerced into reaffirming approximately $6,915,090.00. Georgia has approximately 762 consumers who reaffirmed approximately $395,477.00. Federated has agreed to refund any reaffirmed debt payments already made by the affected consumers, plus 10% interest on those payments, and to forgive the remaining reaffirmed debt.

In addition, Federated has agreed to pay, to the 20 states participating in this settlement agreement, the sum of $2.5 million as civil penalties and to cover all expenses related to this settlement. The State of Georgia will receive 5.7% of the $2.5 million based upon its having 5.7% of the affected consumers.

Federated will issue reimbursement checks beginning March 16, 1998, in the consumer's billing cycle.