Along with Monogram Credit Bank of Georgia, the issuer of the cards, the retailers were named in a class action lawsuit that accused them of misleading customers who participated in promotions over the past four years that offered interest deferred credit card purchases.

While customers were told that they could defer interest charges for six months on certain store credit card purchases over $200, they learned that their credit card payments were being applied toward interest free balances while regular purchases accrued interest.

Los Angeles Superior Court Judge Charles McCoy gave preliminary approval to a settlement on Nov. 17 and has set a final approval hearing on June 6. McCoy has also instructed the companies to begin notifying customers of the terms of the settlement including an agreement by Lowe's and Home Depot to give $5 rebates on purchases of $15 or more to every class member who lost money as a result of the wrongful payment allocations.

About $2.5 million of the $4 million settlement has been earmarked for the rebates, with the rest going to pay attorneys fees.

Companies referred to in story:

Stock %Chg Industry Mkt Cap Home Depot $27.64 +0.95% Home Improvement $46.4B Lowe's Companies $22.85 +0.79% Home Improvement $33.3B Quote data as of: 03/31/2008 12:04 PM