NationsBank to pay $6.2 million in loan lawsuit

January 28, 1995|By Bloomberg Business News

MIAMI -- NationsBank Corp. has agreed to pay $6.2 million to settle a class-action lawsuit on behalf of 55,000 borrowers who claimed they were improperly billed for loan insurance on cars, boats and trucks.

NationsBank, the nation's third-largest banking company, said it expects the settlement to be approved Feb. 16 by U.S. District Judge William Hoeveler in Miami.

Charlotte, N.C.-based NationsBank admitted no wrongdoing.

Under the settlement, NationsBank borrowers in Florida, Maryland, North Carolina and five other states, as well as Washington, will receive an average of $91 each, said company spokeswoman Mary Alice Rogers. Plaintiff attorneys will get $1.2 million, she said.

The suit, filed in 1993, is one of at least nine class-action complaints that have been brought against lending institutions on similar allegations in recent years.

The three Florida plaintiffs, who took out car and boat loans, alleged that NationsBank unilaterally billed them for certain kinds of collateral-protection insurance that they weren't required to have.

The banks did not tell the customers they were billed for the coverage, the suit said.

NationsBank said it was settling to avoid legal costs, and stands by its practice.

"The borrowers agreed to insure the vehicles when they signed loan papers," Ms. Rogers said. "If they fail to live up to their contract, the bank is entitled to protect its security interest in the property."

The settlement applies to vehicle loans taken out at various times between 1987 and October 1994.

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