Sears To Pay $157 Million To Settle Credit-Fraud Claims

CHICAGO - Sears, the largest U.S. department-store company, said it will pay as much as $157.5 million to settle fraud claims that it improperly raised interest rates on its credit cards.

Sears will pay $36 million to reimburse credit-card customers for paying the higher-than-promised interest rates and will issue $118.5 million in store coupons to card holders. Sears also will pay $3 million to fund consumer-education programs about credit practices.

The settlement comes less than a month after Sears pleaded guilty to a federal bankruptcy-fraud charge and paid a $60 million fine for illegally collecting credit-card debt from bankrupt customers. Over the last two years, Sears has agreed to pay more than $498 million in settlements and fines because of its credit practices.

Sears customers filed suit after the retailer's credit unit acquired a nationally chartered bank in Arizona in 1995 and transferred credit-card customers' balances to the unit, renamed Sears National Bank, and immediately raised interest rates.