Store cards investigated over "rip off" claims
15 March 2004
A government watchdog is set to criticise retailers for setting interest rates too high.
Retailers were accused last year of 'ripping off' consumers with interest rates of up to 32 per cent on the cards.
A six month investigation by the Office of Fair Trading (OFT) has concluded that 10 million holders of store cards from household names are paying interest well over the odds, the Evening Standard reports.
The OFT began its investigation after its head John Vickers was challenged by MPs on the Treasury select committee to curb abuses in the sector. MPs accused stores of "highway robbery" and attacked them for maintaining similarly high interest rates.
The OFT investigation is believed to have found evidence that the market is overwhelmingly dominated by the US-owned company GE Consumer Finance, which provides about 60 per cent of all store cards issued in Britain.
Officials have also been looking at the way retailers sign up new store card accounts and have highlighted failures to provide consumers with all the relevant information about the cards, including interest rates.
GE Consumer Finance has argued that interest rates are so high on store cards because of the high costs of operating them and insists it has already addressed many of the criticisms of the way they are sold.