Hall of Shame

Being a member of this hall of shame doesn’t mean a company has broken any laws–it simply means the company or companies it finances charge higher prices to people whose race, income, or credit histories have locked them out of the competitive rates charged by banks and traditional retailers. This list is by no means exhaustive.

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NationsBank is the nation’s third-largest bank and ninth-richest company, with $157 billion in assets. Claim to shame: In 1993 NationsBank bought Chrysler First Inc., at that time a defendant in 189 consumer lawsuits accusing the company of fraudulent lending practices. As part of the purchase, NationsBank secured a three-year indemnity agreement shielding it from liability for any Chrysler First loans. Last year, NationsBank and four other banks set up a $125 million line of credit to fund the expansion of Cash America.

Cash America is the nation’s largest pawn chain, with 251 shops in the United States. The company’s target market: the 60 million Americans who don’t have bank accounts. “A guy in a business suit is going to get good service from us,” says President Jack Daugherty, who started with a single pawnshop in Irving, Texas. “But we’re gonna serve the guy who has coveralls and grease on his hands first. Because that’s our customer.” Claim to shame: Cash America charges an annual interest rate that averages 200 percent.

ITT Corporation is a $70 billion conglomerate whose mortgage and small-loan division, ITT Financial Services, is considered by consumer advocates to be one of the most predatory lenders in the nation. Claim to shame: In California, ITT Financial Services paid $20 million to settle charges of abusive lending practices, including selling optional insurance to customers who didn’t know they were buying it or who were led to believe it was required. The company paid $48 million to settle similar charges in Minnesota. ITT Financial Services has also been hit with lawsuits in Arizona and Florida.

Associates Corporation of North America is a Dallas-based subsidiary of Ford Motor Company, the nation’s fourth-richest company. Associates Corp. earns more than $523 million a year after taxes on consumer and commercial credit of more than $23.6 billion. Claim to shame: Last March, an Alabama jury returned a verdict of $34.5 million against Associates for forging a woman’s signature on loan documents against her home. Associates paid $3 million in Arizona after it allegedly forced 8,000 low- and moderate-income borrowers to buy credit insurance with their loans. And a $200 million lawsuit filed in Maryland alleges that Associates purchased fraudulent home-improvement loans arranged through Sears Roebuck & Co. Borrowers claim they were tricked by Sears into mortgaging their homes.

Beneficial Corp., with help from H&R Block, controls one-third of the market for high-interest refund-anticipation loans. Claim to shame: Beneficial outlets in Roanoke and elsewhere charge $29 for a tax-refund loan. For a typical two-week loan, that translates into 101 percent interest on a $750 refund, and 151 percent on a $500 refund.

American Express is a $94 billion conglomerate that is helping finance the U.S.’s largest check cashing chain, ACE America’s Cash Express. Claim to shame: In Roanoke, as elsewhere, ACE charges up to 6 percent to cash payroll checks and up to 12 percent on personal ones. ACE’s target customers earn less than $35,000 a year.

Thorn EMI PLC owns the U.S.’s largest rent-to-own chain, Rent-A-Center. Claim to shame: Rent-A-Center’s rent-to-own prices for furniture and appliances are two to three times retail. The Roanoke store recently sold a used 20-inch Hitachi TV for $8.99 a week for 61 weeks. Total cost: $548.39, plus tax and insurance. Price when new: $299.

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