ROANOKE TIMES 
                      Copyright (c) 1996, Roanoke Times

DATE: Thursday, August 29, 1996              TAG: 9608290063
SECTION: BUSINESS                 PAGE: B7   EDITION: METRO 
DATELINE: TALLAHASSEE, FLA. 
SOURCE: ASSOCIATED PRESS


FIRST UNION TO REPAY $24 MILLION TO LOAN CLIENTS IN SETTLEMENT

First Union Corp. said Wednesday it has agreed to return $24 million to 110,000 auto loan customers to settle a lawsuit alleging it improperly charged them for excess insurance.

But First Union, the nation's sixth-largest bank, said it didn't admit to any wrongdoing in settling the lawsuit that covered customers who received auto loans from January 1986 to present from a Florida subsidiary.

``We actually settled just based on our decision to avoid costly litigation,'' said Kenneth Darby, a spokesman at the Jacksonville, Fla.-based subsidiary, First Union National Bank. The Florida bank is a unit of First Union Corp. of Charlotte, N.C., which also operates Roanoke-based First Union National Bank of Virginia.

The Florida bank's loan contracts with customers allowed it to insure automobiles against damage if the buyer failed to maintain proper coverage. The cost of policies the banks had to purchase were passed on to the customers.

Attorney General Bob Butterworth and customers who sued in federal court accused the bank of illegally charging customers for unnecessary insurance it bought when customers didn't prove they carried their own coverage.

Rather than limiting the policies to comprehensive and collision coverage, the banks bought insurance for things like repossession expenses and full repayment of loans, according to the attorney general.

Under the terms of the settlement, the bank will provide nearly $5 million in cash refunds to former customers; the remaining $19.4 million will be distributed as credits.


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