HSBC Watch News Release Forum Index
Forum Name: - Horror Stories
Topic Title: Don't Stores Do Any Checking?
Sun Jun 19, 2005 12:13 pm
Reading the horror stories here lead me to question why stores don't look into the company they are considering to do their customer financing? It looks like so many stores are getting a bad name not through anything they did but rather because of whom they chose to do the financing.
Maybe if enough customers complain about the billing practices these stores might wake up and look for a company with less complaints. Especially smaller retail outlets who really don't have a clue.
Just a thought.
Sun Jun 19, 2005 1:11 pm
Many merchants research carefully the finance company they use to provide credit and service the customers' accounts.
All too often, the retailers don't have a choice. Many of the accounts handled by Household, now HSBC are from start up companies or independent dealers. With no track record, in a high risk market arena, the more reputable finance companies may not be eager to accept them as customers.
Some retailers chose Household Retail Services based on the "ongoing compensation". The purchase price is discounted and paid to the merchant by Household. The merchant woud receive a percentage of the interest and fees. Associated fees may include late fees, credit life insurance, and commission from dual application credit cards. Many times the ongoing compensation exceeds the original discount of the merchandise.
Other account sources for Household was liquidation of company receivables under Chapter 11 Bankruptcy. In that situation, the retailer's trustees would sell the accounts to the highest bidder. If the company restructured and remained in business, the sale would be to the account servicer that would provide the easiest credit approval to an applicant.
We monitor customer trends for possible violations of Regulation Z and other possible illegal actions.