Georgia Lender Targeting Seniors Settles with FTC

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Stewart Finance Company, seven related companies, and their principals have agreed to settle Federal Trade Commission charges that the companies deceived consumers, many of them elderly, by, among other things, packing optional products such as accidental death and dismemberment insurance and membership in roadside assistance clubs onto small personal loans of $500 or less. The settlement requires the companies to shut down and to agree to the entry of a $10.5 million judgment in the FTC’s case. The companies will liquidate their assets in federal bankruptcy court and through a federal district court receivership. Because the companies also owe amounts to other creditors, the FTC does not expect to collect the full amount of its judgment against the defendants. Monies the FTC receives through the bankruptcy and receivership will be combined with amounts due from certain individual defendants and directed to a consumer redress fund.

In a complaint filed in September 2003, the Commission alleged that the defendants deceptively induced consumers to purchase expensive add-on products ancillary to the loan, to participate in a free “direct deposit” program that was not in fact free, and to incur additional costs and fees by repeatedly refinancing their loans. The complaint also alleged that the company failed to provide consumers who were denied loans with federally required “adverse action” notices, and took unlawful security interests in borrowers’ household goods.

According to the FTC, the Stewart companies violated the FTC Act, the Truth In Lending
Act (TILA), its implementing regulation, Regulation Z, the Fair Credit Reporting Act, and the FTC’s Credit Practices Rule. In addition to defendants Stewart Finance Company and the late John Ben Stewart Jr., the FTC’s complaint named Stewart Finance Company Holdings, Inc.; Stewart National Finance Company, Inc.; D & E Acquisitions, Inc.; Preferred Choice Auto Club, Inc.; Stewart Insurance, Ltd.; and J & J Insurance, Ltd. The complaint also named Mr. Stewart’s wife, Janice Stewart, and his two sons, William Joseph Stewart and John Benjamin Stewart III. The family members of John Ben Stewart Jr., the deceased company owner, were joined solely as relief defendants and were not charged with any wrongdoing.

The stipulated final order permanently bars the Stewart companies and their principals from participating in any lending or direct deposit business. The stipulated final order also prohibits the companies from failing to disclose clearly and conspicuously the material terms of any loan, from misrepresenting the cost, benefit, or optional nature of any add-on loan products, from soliciting consumers for costly renewal loans, from misrepresenting direct deposit as a “free” service, or misrepresenting its costs and terms, from violating TILA, from violating the Fair Credit Reporting Act by failing to provide adverse action notices, and from taking security interests in household goods contrary to the Credit Practices Rule.

Under the terms of the settlement, the FTC will obtain

  • a $10.5 million claim in the consolidated bankruptcy cases of Stewart Finance Company, Stewart National Finance Company, and D & E Acquisitions, Inc., and in the bankruptcy case of John Ben Stewart Jr.,
  • a fifty percent share of the assets of the district court receivership,
  • a suspended judgment of $250,000 against relief defendant Janice Stewart, and
  • a judgment of $423,592.91 against relief defendants William Joseph Stewart and John Benjamin Stewart III.

The settlement, announced today by the Federal Trade Commission, must be approved by a federal district court in Atlanta, Georgia, before it is final. The Commission vote authorizing staff to file the stipulated final judgment and order was 4-0. The order was filed in the U.S. District Court for the Northern District of Georgia on November 4, 2005.

NOTE: This stipulated final order is for settlement purposes only and does not constitute an admission by the defendants of a law violation. A stipulated final order requires approval by the court and has the force of law when signed by the judge.

Copies of the complaint and stipulated final judgment and order are available from the FTC’s Web site at and also from the FTC’s Consumer Response Center, Room 130, 600 Pennsylvania Avenue, N.W., Washington, D.C. 20580. The FTC works for the consumer to prevent fraudulent, deceptive, and unfair business practices in the marketplace and to provide information to help consumers spot, stop, and avoid them. To file a complaint in English or Spanish (bilingual counselors are available to take complaints), or to get free information on any of 150 consumer topics, call toll-free, 1-877-FTC-HELP (1-877-382-4357), or use the complaint form at The FTC enters Internet, telemarketing, identity theft, and other fraud-related complaints into Consumer Sentinel, a secure, online database available to hundreds of civil and criminal law enforcement agencies in the U.S. and abroad.


(FTC File No. X030086)

Contact Information

Media Contact:
Claudia Bourne-Farrell
Office of Public Affairs
Staff Contact:
Anne M. McCormick
Division of Financial Practices