First Acceptance settles Alabama class action

Exact payments not yet known, but investors' reaction suggests tab will be hefty

First Acceptance has agreed to settle a class action brought by some of its Alabama customers who accused the auto insurer of implementing a scheme to sell them motor club memberships.

In a filing with regulators, First Acceptance outlines the repayment terms of the settlement but says it's too early to estimate a final tab. About 55,000 people who paid $5.8 million for their club memberships are eligible to join the class and the company has committed to also pay $2.5 million to the group's lawyers. Click here for the full agreement.

The company earlier this fall settled a similar suit filed by Georgia policyholders. In that case, First Acceptance will repay its customers and shell out $3.8 million to their attorneys. (Search for 'Georgia.')

Shareholders of First Acceptance headed for the exits Thursday after the company's filing, taking the stock down more than 22 percent to $2.30. So far in 2008, the shares (Ticker: FAC) have fallen more than 45 percent.