Household HSBC Watch

Tue Jan 25, 2005 9:51 am      

Went to pay debt on "24 months" same as cash only to find out time had expired. Have not received bill in last 10 months. They state refused to give correct address could not locate me and now want payment almost double the original purchase amount. Purchase at Rodes store in Louisville Ky.

They did not even have correct phone number for me even though they claimed to have contacted me. Don't know what to do at this point. Please help. This will wipe me out financially. I have never missed a payment, filed bankruptcy, and have perfect credit. I was at the store to pay the debt in full when I found this out.

Tue Jan 25, 2005 2:09 pm      

Per telephone conversation with Charles in Kentucky, January 25. 2005, I received an itemized listing of the chain of events leading to his report.

1. Furniture was purchased February 2003, delivery furniture was received March 1, 2003 from Rhodes Furniture.

2. Rhodes Furniture verbally told Charles that the 24-month interest free promotion would begin on those dates and full payment would be due by March 1 2005 in order to avoid interest charges.

3. The finance contract was written in a manner that the interest free period would expire 2 January 2005 (22 months).

4. The first and only correspondence (statement) Charles received from HSBC/Household was received May 2004, mailed to his current home address, the same address his furniture was delivered.

5. The statement indicated the interest free period was 12 months and had expired with interest added and payments due.

6. He contacted the Rhodes furniture store to get the account adjusted with HSBC and Household to reflect the 24-month interest free financing as agreed. The account was corrected, and Rhodes Furniture staff indicated that the Rhodes store paid HSBC/Household $1000 to make the correction.

7. January 2005, he contacted the Rhodes Furniture Store where the furniture was purchased seeking information on where and how to make the payment to HSBC/Household. He was given a telephone number for HSBC/Household customer service.

8. During his telephone conversation with HSBC/Household customer service, he was told that the interest free promotion had expired January 2nd 2005 and his balance on the original purchase of $4136.xx was now $7745.xx

9. HSBC/Household customer service told Charles statements had been mailed. When he confirmed the statement address, the address HSBC Household gave him was over two years old and NOT the address he had resided at for two years. See paragraph 4

10. HSBC/Household customer service told Charles, they had called and spoken with him and he “refused” to update the mailing address for their records. He did not remember receiving such a call, and when he asked for the telephone number HSBC/Household had on record, the CSR refused to give it. No calls were placed to his work number, information that was included on his application.

11. HSBC/Household customer service asserted that $7745.xx was his balance, and was the amount due to resolve the issue. All future payments and interest would be based on that amount.

Based on the information as it was given, there are multiple violations of Truth in Lending.

http://www.fdic.gov/regulations/laws/rules/6500-1400.html

Paragraph 1-3: Rhodes Furniture staff misrepresented the finance period and expiration date to Charles when they wrote the contract with January 2, 2005 as the expiration date of the term of the contract. Based on the “24 months” and delivery of March 1, 2003, the contract expired at 22 months and not at the 24 months as advertised. Interest rates and cost of credit was not disclosed on the contract.

Paragraph 5: In accordance with Regulation Z, Truth in Lending, the finance company (HSBC/Household) is required to mail monthly statements. Not just one statement 15 months into the contract, but a statement each and every month a balance is owed.

Paragraph 7: Payment information should have been included on the statements Charles never received.

Paragraph 8: The $3609 increase in the balance over the 22-month period sounds usurious and suspicious to me. The calculator I used to write this discussion indicated that $3609 increase over the initial purchase amount required 36.99% compound interest over a full 24-month period.

http://www.lectlaw.com/files/ban02.htm
Banks have separate rules. In fact, due to high inflation, in 1980, the federal government passed a special law which allowed national banks (the ones that have the word "national" or the term "N.A." in their name, and savings banks that are federally chartered) to ignore state usury limits and pegged the rate of interest at a certain number of points above the federal reserve discount rate. In addition, specially chartered organizations like small loan companies and installment plan sellers (like car financing companies) have their own rules.
“KENTUCKY, the legal rate of interest is 8%; the general usury limit is more than 4% greater than the Federal Reserve rate or 19%, whichever is less. On loans above $ 15,000 there is no limit. Judgments bear interest at the rate of 12% compounded yearly, or at such rate as is set by the Court.”

Paragraph 9: One statement mailed to and received at the proper mailing address. No other statements were received. Why would HSBC/Household verify an address to the account holder (Charles) that was 2 years out of date, when a statement had been mailed to and received at Charles’ current and proper address?

After speaking with Charles the list of apparent violations is staggering. Initial disclosures and Truth in Advertising from Rhodes, violations of Truth in Lending by HSBC/Household regarding the failure to properly mail statements, possible mail fraud regarding the lack of receipt of statements, usurious interest per the state of Kentucky, the list goes on and on.

At this point of time, my recommendation (Householdwatch.com) is to write all of the government agencies we have listed on our site. It will probably involve two letters to all agencies one complaint for HSBC/Household the other a complaint about Rhodes Furniture. Also include Rhodes Furniture in the complaint to the local Better Business Bureau.

Under the terms of most finance agreements between HSBC/Household and the retailer, the term on-going compensation rears its ugly head. The retailer receives a percentage of the interest, fees, and charges paid by the consumer. This indicates that in this case, Rhodes Furniture would benefit significantly to the substantial fees charged to Charles by HSBC/Household and may have actively promoted the misunderstanding leading to these charges by misrepresenting the terms (interest rates, cost of interest, duration of the interest free period) the financing.