A banker, asking bankers a question-LOL.

My husband is having a problem with a well known department store. I hate to mention a name, but here's a hint, the first of their thousands of stores was opened in Evanston, Wyoming before most of us were old enough to go shopping, or even born.

We've both been lifetime customers of this chain, as were our parents. We have never missed a payment and each spend about $1,000 a year with them.

Last fall my husband paid his card to zero, but unfortunately the payment was a couple of days late. We all know how quick some companies slap on those late charges, so it literally could have been only hours late. Well, my husband got the next invoice and it had the $25 late charge due, but of course the balance was zero. He should have called them immediately to have it removed, but he was so POed about it that he wouldn't. He even exclaimed "I've been a customer for 30 years, I am not paying this."

The next month we got a bill for $50. Of course it was threatening and POed him even more. This went on for 4 months, each time a new late charge, due to a late charge. Finally I couldn't stand it anymore, so I called them and explained the situation. The gal on the phone refused to delete the first late charge, but said she would invoice me for just the original amount. I asked her if it was worth the measely $25 to lose two lifetime customers (separate accounts) and she basically said yes. She was very helpful and almost anxious to close my account, so now I'm POed. We never did get a new invoice for $25, which I was will to pay at the time.

My husband had one of the highest credit scores I have ever seen. Last I knew, it was 842. I'm up there as well. We are the kind of customers a business would or should want to keep happy. In who's business world is $25 worth losing two lifetime customers?

As mad as I am about how they have treated us, the meat of my complaint is this: How can they get away with charging late charges on late charges, reporting the account past-due to the credit bureaus due to a late charge and now have turned the account over to a collection agency to collect a late charge? This is not legal in my world, how is it legal for this company, (and their bank)?

Thanks for letting me vent. I'm ready to call a lawyer over $25. It's all so crazy.

Deb

To answer your question it will be important to know what state the card was issued from. Just because the HQ is in Wyoming doesn't mean the credit card division was chartered in Wyoming - they could very well be out of Delaware or one of the other handful of states that do allow the practices you've described.

Before I gave up, I'd take the time to write a letter to the company CEO. Don't mail it to the "complaint" address on the credit card statement, mail it to the CEO at the corporate HQ. My guess is you'll get an apology, a clean credit record and maybe even a couple gift certificates to entice you back.

Good Luck

This sounds like a clear violation of the FTC Credit Practices Rules 16 CFR 444.4 to me:

§ 444.4 Late charges.
(a) In connection with collecting a debt arising out of an extension of credit to a consumer in or affecting commerce, as commerce is defined in the Federal Trade Commission Act, it is an unfair act or practice within the meaning of section 5 of that Act for a creditor, directly or indirectly, to levy or collect any delinquency charge on a payment, which payment is otherwise a full payment for the applicable period and is paid on its due date or within an applicable grace period, when the only delinquency is attributable to late fee(s) or delinquency charge(s) assessed on earlier installment(s).

(b) For purposes of this section, collecting a debt means any activity other than the use of judicial process that is intended to bring about or does bring about repayment of all or part of a consumer debt.

Sounds like a great class action lawsuit opportunity!!

Thanks Randy and Greg. I was definitely contemplating the letter to someone who cares. (And I'll admit, I was thinking a remedy plus a gift certificate would help my anger, lol). And Randy, that was my first thought. Unfair and deceptive is unfair and deceptive in anyone's book, (by my logic anyway). I immediately thought class-action. I think what I'll do is write a very nice letter, citing the FTC and ask for an immediate response. I won't threaten, just point it out, (which I did to the last "customer service" person I talked to).

My husband owes me one if I get this resolved, don't you think? ROFLMAO

Deb

Careful, I might stop by and collect this fall on my way to my annual mule deer hunt in Idaho

LOL!!!! I'd be bummed if you didn't stop by!

Why are you surprised by this? Department stores ship merchandise produced by slaves in Sri Lanka and charge you a 1000% mark-up. Considering they are already screwing you there, what made you think they wouldn't do the same on the store credit card? (which is the entire point of department stores providing credit) I would never ever recommend anyone get credit from a department store, and I would advise you to take up the representatives offer to close your account.

Let me explain my last comment a little more -

I used to work management at a department store (which very possibly could be the one you refer to). The *entire* point of store credit is to screw the customer this was known to my self and everyone else employed by the company who wasn't hopelessly naive. The company even owned the bank that issued the credit.

It was even company policy to mandate employees use the store credit card in order to get the 10% employee discount. (guess how fast those 10% "discounts" vanish when you get in major debt at 20+% interest. At the level employees were paid it happened all the time) The company even tried to push this. Sometimes corporate would tell us to make sure everyone knew it was "extra 15% off day for employees"! This essentially put some employees in servitude to the company like the old company store concept. They got paid a check at $7/hr, and a ton of that would go straight back to the company once they got in debt to it.

The only thing corporate cared associates do was push credit to customers. It didn't matter if associates didn't sell a single thing for weeks, as long as they got the credit cards out they were in a good position. Failure to sell the cards for a week or two, however, could mean that associates job.

I never said anything of course, but it always made me sad seeing people go in to debt to buy something for $400 on credit that only cost the company a few dollars at most. I was being literal with the 1000% mark up statement.

As a result of my experience the credit practices of department stores make me sick. Entirely unethical. IMO if you get credit from a department store you are just asking for trouble and to be ripped off.

Wyogirl - Sounds like JCPenney's to me.

They no longer own or manage their own credit card. It was outsourced several years ago. I'm not exactly sure how the deal was structured. BUT, a word with the store manager, politely advising him that may no longer be patronizing his store because of the treatment by the Credit division, can have amazing results.

I worked for them in another life, and the Store managers always carried a lot of weight.

Anon - I fail to see that an employee making a decision to purchase something on credit, without force, is servitude. Credit cards should only be used for convenience, and balances should be paid in full every month. If people don't use credit wisely, why is it the stores fault?

"why is it the stores fault? "

It's the stores fault because it's predatory. Come now, when you're paying your employees $7/hr tops do you *really* believe they are going to be able to pay back the high credit limits they are given? We are talking 1000, 2000, 3000 dollar limits here with the highest interest rate allowed by law.

Now, knowing this it was company policy to further entice this by special "Oh look! An extra 10% for employees day!" and other such practices.

It's the stores fault for intentionally giving credit lines they know full well employees can't pay off (as they write the pay checks) with the max interest possible AND doing everything they can to entice employees to use the cards - even going so far as requiring they get one.

I'll further say that if credit card debt was a felony and the police followed the same practices it would probably be considered entrapment. That's how predatory it is.

Your argument has the same validity as the 450 pound man in NY suing McDonalds for his obesity because he couldn't stop eating 4 to 6 Big Mac's a day. Self-control?

Here we go again-blaming the store for someone racking up the card and not being able to pay it back..."they shouldnt have given it to me" UGH...I had this argument the other night with my father in law-he was complaining about the ridiculous APR on his credit card-I agreed the rate was high, but i told him to stop using it, close it, transfer balance, etc. They didnt make those purchases...Everyone is a victim...jeez..

I posted a response but it was way too long. Bottom line, go get your lawyer. They're not going to stop until someone challenges them. If you've ever attended the ABA Compliance Schools you've heard the phrase, "Regs came about because a consumer complained." Equating predatory lendiing to the guy suing McDonald's for making him fat is comparing apples and oranges. There are laws against predatory lending (and extreme collection practices). There's no law against a McDonald's selling a QP to a fat guy. You could threaten then back down when they credit your account, and give you gift certificates, but that doesn't take care of the next guy. Defending your suit is going to cost them a lot more than crediting your account some bogus fees and a gift certificate!

CPB-the original poster/question did have a legitimate beef and it was addressed. The thread continued, and an ANON poster indicated they used to work at a dept store essentially said the store made the employees charge merchandise that they couldnt afford and shame on the store. The McDonalds comparison is appropriate-noone forced the employees to buy merchandise they couldnt afford. Same with McDonalds-they didnt shove the Big Mac down his throat-he went in 2-3 times per day. Personal responsibility. Bottom line. If I go buy a Lamborghini, I should have an idea if i can afford it. I am not saying people arent taken advantage of, but people have to also buck up and take some responsibility.

Sox - Congrads on the Sox. I lived in CT for 3 yrs and used to watch them on NESN. I disagree on the McD comparison. I have first hand knowledge of a young lady who purchased a Nissan Maxima. She bought it with a boyfriend (titled in both names). Old story, he takes a powder and she's left holding the bag. The loan officer told me that he warned her she couldn't afford the car. I asked him if that were the case, why did he approve the loan? They took a Chapter 7 and the bank was left with a $10,000 loss. Number 2: Little old lady plunks down life savings on down payment for home. She doesn't make the ratios, but loan officer approved based on contributing factor that large down payment equals low LTV. I argued that LTV doesn't pay the note, and six months later the house is in foreclosure. That bank didn't lose, but was it ethical what they did? I don't think so.
Hey - Saints in '05? Naaaaaa

Sox - it was me. sorry I posted Anon. I didn't log back in.

CPB-Thanks-we finally won, and to put the Yanks away in the process made it that much better. I never thought i would see it. We arent off to a great start this year-oh well. As long as the Yanks lose too, it doesnt sting so bad.
The way I read the issue with the department store and employees was that the poster made it seem like it was the big bad store that made the employees charge merchandise they couldnt afford. I have worked at places that offered employee discounts-doesnt mean I had to buy anything.
It is disgraceful that there are lenders,financial institutions, contractors, etc that prey on people and take advantage of them-there is a need to enact and enforce consumer protection laws, and being the Compliance Officer here, it is something we take seriously. It just seems like the "I'm a victim" mentality grows and grows. I know someone that is on a fixed income, and has trouble paying their property taxes and utilities-why? Because she is a shopper on QVC, has to have her hair and nails done every few weeks, and eats out all the time. ( Her income is sufficient to handle the monthly expenses, and have some left over) How she spends her money is none of my business, but she makes it my business when she complains about the delinquent tax notices and the collection calls she recieves.
I understand your point on the old lady mortgage issue. Just look at FHA underwriting guidelines-very liberal ratios, source of downpayment, credit history, etc.-many of those people close with no money left over. Scary to think what may happen when the water heater blows or the roof needs repairing.

Who knows-maybe it is the Saints year!!!

The McDonalds example is also totally off. The situation would be different, wouldn't you agree, if

1. McDonalds had the guy for 8 hours a day being able to tell him whatever they wanted. (which the company could do with employees, and enticed them daily)

2. Forced him to get the big mac. (which the company did with the card)

and

3. Had McDonalds (management) encourage him to eat the big mac all the time. Or shall I say use the card.

All 3 items different than the McDonalds example and alter the situation considerably.

"but people have to also buck up and take some responsibility"

I agree, and wouldn't you also agree those offering loans should also be responsible?

You say you are a compliance officer so I assume you have some knowledge of the issue. Let me ask you this - do you consider it responsible to issue a card with a line of credit between $1000-$3000 at 20+% interest to a person who's sole income is $7/hr?

A person making such a small amount of money is at serious risk of going in to debt. That's barely paying the required bills money. A simple thing like the car breaking down could push them over the edge. I would say anyone who issues such a loan is asking for it, yet it happens all the time. Then you see them sitting around blaming the card holder when they knew full well they wouldn't be able to pay that credit back yet were irresponsible enough to give it.

So your telling me that the employees were exposed to:
1) Brainwashing;
2) The deparment store forced the employee to buy clothes.
3) Management spent their day encouraging employees to buy clothes every shift they worked.

And the robotic employees complied...
The McDonalds customer chose to eat a Big Mac everyday, the department store employees chose to charge more than they could afford. Both need to accept the consequences of their action.

Sox, you keep dodging the question of rather or not a creditor should be responsible when issuing credit. What is the answer to that - yes or no?

I didnt see your follow up post before my response-let me answer that-

Shame on the lenders, credit card companies, etc that offer loans or credit to those who they know can not afford to repay. Since I am in mortgage lending, I am not familiar with the process of approving credit limits on credit cards for customers (I can guess there are very little, if any, guidelines). So yes, the institution takes the risk and has responsibility. My point is simply that the customer must also take responsibility and know their limits. It is one thing if someone is in dire straits, and has to charge the groceries on their credit card. But being "forced" to buy that new sweater by managment doesnt fly here.

Thank you for the response sox. I agree with you on everything you just wrote, and I wish something would be done about high lines of credit being given to those who can not afford them. As well I wish people who were given them didn't allow them to bring them in to deep debt.

Shall we head to the bar? I am thirsty now...

"I would think this would get the attention of the DOL or union organizers. "

One would think so, but unions were also discouraged heavily for obvious reasons.

wyogirl,
Was there ever any resolution?

Quote:

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It's quite true. Check out the policies of the May Company, my former employer. Mandated for employees.

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My bank also mandates that employees in certain positions are issued credit cards. I've had mine for 8 years, but have never used it. They can mandate you having one, but they can't force you to use it. PERSONAL RESPONSIBILITY.