MBNA Settles Lawsuit Over Misleading Ads on Its Rates

MBNA Corp. agreed to pay as much as $7.8 million to settle a class-action lawsuit accusing the world’s No. 3 credit card issuer of luring consumers with misleading advertisements for low-rate cards.

MBNA will pay up to $6.5 million--plus $1.28 million in lawyers fees--to reimburse customers deceived by ads touting how much they’d save by transferring their credit card balances to an MBNA account, consumer lawyers said in federal court in Wilmington on Monday.

Andrew Spark, a Florida attorney, sued Wilmington, Del.-based MBNA in 1996. He said the bank’s ads didn’t disclose that monthly payments first applied to new purchases didn’t carry the low interest rate.

“I’m satisfied the settlement appears to be fair and reasonable,” U.S. District Judge Roderick McKelvie said. He will decide whether to give final approval to the settlement at a hearing in February.

There have been a number of similar settlements of consumer complaints recently over credit card practices. A federal judge in Los Angeles was expected to decide this week whether to approve a $45-million settlement of consumer suits against Citigroup Inc.’s Citibank unit.

Under settlement terms, MBNA cardholders who signed up for the 6.9% introductory rate will get an automatic $3.57 credit toward their account to make up for the lost savings promised, lawyers said.

Consumers who have closed their MBNA accounts must submit a form to receive the $3.57 credit.