Store-card debt written off

| April 17, 2012
Store-card debt written off

A court ruling writing off a consumer’s £5,126 store-card debt has opened the door for similar cases according to a report by the BBC.

Judge Henrietta Manners ruled at Clerkenwell and Shoreditch county court that Santander must write-off the debt on a credit card held by Diana Mayhew.

Ms Mayhew’s store card was automatically upgraded to a credit card by Santander in 2003.

However the bank failed to supply the terms and condition for the new card, which was issued by GE Capital which ran the Harrods store card business.

Ms Mayhew argued that she had no asked for the card to be upgraded.

“If you send someone a card marked ‘Harrods, go spend’, the temptation is massive to use it,” she said.

Although Santander claimed that GE Capital did not need to send out new terms and conditions when the card was upgraded, the judge said that this information was required under consumer credit regulations.

As the bank had failed to adhere to these regulations it is not legally allowed to recover the debt.

The case could lead to other defaulting card users arguing that their debts are unenforceable if their card has not been upgraded properly.

Meanwhile, new rules have been introduced for store cards as part of changes agreed by the government and the credit card industry.

Shop staff can no longer be paid a commission when they sign up a new customer, and incentives or discounts cannot be offered until seven days after the date the card is taken out.

This means that stores can no longer offer a discount on goods in return for customers taking out a store card.

The new rules also make it an obligation for stores to train their staff about store cards.

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