In the late 1990s the idea of the store card became all the rage amongst retailers. For most it seemed like a win-win situation introducing a card that could only be used in their store which would enable them to charge customers a rate of interest against their borrowing. Store cards work just like a credit card and, despite bad press, have shown an enduring resilience with many high street stores, including Dorothy Perkins, Topshop and Debenhams having long established schemes.
Much of the criticism surrounding store cards centres on the fact it encourages customers to get into debt. Many stores offer customers discounts if they use their cards persuading many to use them even when they have the cash to hand. The idea, of course, is presented that customers can use the card on the day and can simply pay off the account at the end of each month. As with credit cards; however, this is often not the case. Another issue with store cards is, for a significant length of time, they weren’t very well regulated. This meant that terms and conditions were badly explained and many customers did not realise the cards were like credit cards and would incur interest if not cleared quickly.
Many of the store cards, including Dorothy Perkins, are owned by GE Money. In 2007 GE Money received a fine of £610,000 from The Financial Services Authority for failures connected to the sale of Payment Protection Insurance.
Payment Protection Insurance has been sold for almost 30 years. The cover is designed to protect a borrower who cannot work due to sickness, accident or involuntary unemployment. The insurance assists the borrower by stepping in and taking over their debt repayments. Payment Protection is not suitable for everyone, though, and in the past it has been extensively mis-sold. This means many people have been sold cover they do not want or need or is unsuitable for them.
The FSA found that GE Money had failed to put in place adequate systems and controls with regards to the sale of PPI and had not treated its customers fairly. 95% of GE Money’s PPI sales took place in retail stores, such as Dorothy Perkins, alongside the sale of store cards. This meant the sales were actually made by around 300,000 retail assistants employed by the individual stores. It was found that GE Money had failed to regulate these sales and ensure customers were provided with the appropriate policy documentation. It was also found that, in many instances, GE Money had not ensured customers were given adequate information in order to make a decision whether or not to purchase the cover.
Consumer rights groups have also been quick to point out that store cards were often sold by staff who had received insufficient training and no real understanding of the product they were selling. This led to the cover being offered to people whose circumstances made them unsuitable – for example, students who would not required cover for loss of employment. A lack of training and regulation also meant that most customers were not made aware of the terms of the policy or that cover was available elsewhere.
GE Money was not the only lender fined during the PPI investigation. Fines were also handed out to many other lenders including Egg, Capital One and Alliance and Leicester. As a result of The FSA’s review of the PPI market customers who have been mis-sold a payment protection insurance policy can now make a claim. If the costs or terms and conditions of your policy were not explained to you, you could be entitled to a refund. You may also be able to make a claim if you were sold a policy that was unsuitable for you or you already had cover in place elsewhere.
If you believe you have been mis-sold a PPI policy on a store card, by Dorothy Perkins or any other lender you have the right to make a claim. You can get started simply by calling 0207 471 2000. You could receive a PPI refund worth hundreds, or even thousands, of pounds and your payment protection refunds could be in your account in just eight weeks.