Major stores criticised over credit

SOME of the country's biggest high street stores have been accused of exploiting Suffolk shoppers who are facing the financial pinch this Christmas.

Anthony Bond

SOME of the country's biggest high street stores have been accused of exploiting Suffolk shoppers who are facing the financial pinch this Christmas.

Following an undercover investigation with the EADT, trading standards officers have attacked the way a number of major high street retailers are signing up consumers on store credit deals.

The investigation, carried out as many people struggle amid the credit crunch, found that:

n A number of stores were breaking consumer credit regulations.

n In less than two hours, 13 stores offered credit totalling £10,000.

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n Large incentives were offered for shoppers to sign up instantly for credit - the higher the APR, the more incentives were offered.

Reg Ruffles, assistant county trading standards officer, said last night: “I feel very strongly about the incentives offered. People are being encouraged to take out credit by these incentives. I think it is morally wrong and it grates.”

The investigation found that many stores were keen to sign shoppers up to credit agreements on the spot. Only two of the 13 stores - all national chains with branches in Suffolk - required more than a bank card as identification.

In order to get shoppers to sign up a number of incentives were offered, including free items, vouchers, discounts and 'buy now, pay in 12 months'.

One of the most worrying aspects for the trading standards officers was that only three of the 13 stores visited allowed them to take away a copy of the terms and conditions of a credit agreement - which would allow people to think about a deal before they signed up.

The 10 other stores wanted the undercover officers to sign up straight away and would only let them take away marketing material. This goes against the sprit of the Consumer Credit (Disclosure of Information) Regulations 2004.

Four of the stores were actively promoting store cards with one employee positioned at the entrance with a pad of agreements to sign people up.

The investigation found that the typical APR of the credit agreements offered ranged from 18.9% to 30.9%. Officers said they were aware of a high street store offering a credit card at 183% APR.

Four of the stores had adverts which offered an incentive to apply for credit, but failed to have a typical APR displayed more prominently - as required by the Consumer Credit (Advertisements) Regulations 2004.

Eleanor Lake, Fair Trading Officer for Suffolk Trading Standards, said she was concerned about the incentives offered.

“I was surprised at the number of incentives one store offered - this store had one of the higher APRs, and shoppers may be likely to overlook this in the face of these 'good offers'.

“These cards are sold on the basis that if you pay off the balance it won't cost you anything, and at the time you sign up you may intend to pay off the balance. But other expenses get in the way, especially at Christmas, and if you only pay off the minimum amount you will be charged high interest payments, which soon outweigh any incentive you were offered.”

Ms Lake advised people to shop around for the best deal.

“If you do need to borrow money then make sure you shop around for the best deal, comparing the APR rather than the offers. Consider a store card or loan as a separate purchase which should be shopped around for as much as any major purchase. Don't get dazzled by the incentives.

“Make sure you are not paying for this Christmas next Christmas.”

The British Retail Consortium - which represents some of the stores involved in the investigation - declined to comment.

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