Household HSBC Watch

Wed Mar 09, 2005 12:31 pm      

PROSPECT HEIGHTS, Ill., March 8 /PRNewswire/ -- HSBC - North America's retail services business has renewed its relationship with Domain Home Fashions to manage the company's private label credit card program. Domain is an upscale retailer of unique and high quality home furnishings. --- end of press release ---

Partners since 1994, the article says. Since 1994 Household International, now called HSBC Finance Corporation, has been known as a troubled predatory lender. Relating to court documents on Shea v Household, the troubled predatory lender applied payments late, often one day after the close of the billing period, resulting in higher profits to Household International, HSBC, and the merchants. This questionable activity took place from 1994 - 2004. Domain Home Fashions still renewed with the company.

Putting reputation at risk, Domain Home Fashions willingly aligned their customers with a credit card financing operation which is questionable at best. To fully understand how HSBC (Household International), GECF, and others compete for business in the private label credit card market, we examine two shocking reports.

1. When Mac Tools looked at financing with HSBC, GE had routinely turned down applications. Reports say HSBC offered to approve those that had been turned down. If these route men, drivers and customers got behind on payments they were hit by late fees and overlimit fees. Part of the ongoing compensation went back to Mac Tools.

2. As HSBC (Household International) biggest merchant, Best Buy said they and HSBC would accept and process incomplete credit applications, including those that lacked proper ID, and those that lacked signatures. As such, customers reported being sold credit insurance they did not apply for, and Household Bank MasterCards they did not apply for. Customers were charged a $99 annual fee for the MasterCard, and were bound by binding arbitration relative to the credit insurance which could not be cancelled after 60 days. Even though HSBC could not, or would not produce valid signatures, Best Buy benefitted from ongoing compensation. To continue this apparent scam, Best Buy said they would absorb the entire cost if the application turned out to be fraudulent. The entire process appears to be a violation of the Patriot Act.

Best Buy was sued by two states for deceptive advertising. Household International, now called HSBC Finance Corporation, has been sued many times for many things since Domain Home Fashions signed on with them in 1994. William F. (Bill) Aldinger, as CEO of Household, Director at HSBC, and board member at AT&T and MasterCard (now we see the link) has been involved in settlements and suits totalling over a whopping $2 Billion (US Dollars.)

To further analyze Domain Home Fashions' decision, let's look at the issue of "ongoing compensation" to the merchants. EchoSphere v Household gave us some great insight thanks to court documents and public records. Are possible illegal revenues collected by credit card financing, a percentage of which is paid to the merchant, justification to look at Racketeering, influence and corruption (RICO)? We analyze another of Bill Aldingers subsidiaries, Beneficial Finance, for the details. In the H&R Block / Household RICO it says defendants "operated a scheme to defraud customers, distinct from the other ordinary business dealings each conducted, whereby Block would attract and mislead customers into purchasing extremely expensive loans from Beneficial in exchange for a cut of the profits."

In an Alabama suit they said: "HRS conducted this scheme to defraud its customers, including the Plaintiff(s) and members of the class, to increase its profits by not disclosing and then assessing its customers with hidden charges and fees."

Is the current relationship between HSBC and their merchants a scheme to defraud some customers? Is the online payment website non-operational by design? Did Domain Home Fashions benefit from the ten year period covered by Shea v Household? You decide.

"Our 10 year partnership with HSBC has been very rewarding," said William Rauch, chief financial officer for Domain Home Fashions. "By working together on new initiatives and promotions, we've seen an increase in our average sales transaction..." One must ask the question about "no interest for 6 months" or 12 months, or longer. Who benefits, and how? Who loses? If you do not get your statement in month 12 of an interest free promotion, can't pay online because the website is down, and your final payment is credited late (Shea v Household) the winners are HSBC and Domain Home Fashions.

On a $3000 furniture purchase, if interest is called due and late fees assessed, although it may be no fault of your own, these "winners" take another $1000 from you and your family. Furniture has a 300 percent markup in the first place. Then the "winners" split the extra $1000 between themselves according to the contract which William Rauch just renewed with HSBC. And when they get caught Household and HSBC pay $11 million to settle the allegations. Now you know the rest of the story.