By Richard Burnett of The Orlando Sentinel

Tens of thousands of customers of a Household International unit have been excluded from the lender’s multimillion-dollar payment to settle claims of abusive lending practices, consumer experts said Thursday.

Although the settlement covers at least 300,000 Household customers nationwide, the loophole in the deal could shut out as many as 75,000 customers, mostly of Decision One, a Household subsidiary based in Charlotte, N.C., according to industry experts. It is not clear how many will be affected in Florida, where claim notices began arriving this week to about 41,200 customers of Household Finance, Beneficial Finance and Household Realty.

Decision One has sales staff throughout the state and regional offices in Boca Raton and Tampa. More than $23 million has been earmarked for the mortgage lender’s Florida customers, the fifth-largest share of a record $484 million nationwide deal negotiated by the National Association of Attorneys General. But payment is only available to customers whose loans came from a Household or Beneficial retail office between January 1999 and September 2002. Customers whose loans were acquired from another lender by Household or came through a mortgage broker are not eligible.

The deal’s loopholes have drawn criticism from some consumer activists, who argue that Household and all its subsidiaries should be hold liable for illegal loans. “There are for too many victims of Household-Beneficial who are left out of this settlement,” said Tom Methvin, a consumer lawyer in Montgomery, Alabama, who has filed a half- dozen lawsuits alleging predatory lending tactics by Household and other large lenders.

“For a company as big as Household, all this deal amounts to is a blip on their radar screen.” But Household officials said the company has already initiated a number of reforms to improve conditions for consumers. And they contend the so-called “loopholes” in the settlement are appropriate exceptions that recognize differences in their business. For example, the company doesn’t do business with mortgage brokerages, but its Decision One subsidiary works extensively with brokers.

That unit, however, was not part of the consumer complaints involved in the settlement, spokesman Mark Friedlander said. “The Attorney General did not have issues with Decision One or our other business units,” he said. “The settlement involves only customers who had a direct transaction with Household… Certainly we can’t be held responsible for any transaction that was handled by a secondary source.”

Illinois-based Household International was accused of gouging customers with exorbitant interest rates, hidden fees and other abusive lending terms. The company agreed to settle the claims but did not admit to any violations. Household generated many predatory-lending complaints in Florida, but there none involving Decision One, said Allison Bethel, director of the state attorney general’s civil rights division, which handled the case. “We had focused on what we felt were Household’s violations of the state’s deceptive trade practices statute,” she said.

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