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pounds 3,259 instant store credit on pounds 40 a week; SHOPPING.

Leading stores are failing to check out shoppers fully before letting them run up thousands of pounds of debt, a Mirror investigation reveals.

Consumer experts are alarmed at the trend which they warn will lead to people finding themselves unable to meet repayments.

In less than five hours our investigator Kate Kelly, an Oxford University student living on pounds 40 a week, was offered pounds 3,259 in instant and interest- free credit.

Kate, 19, visited numerous stores claiming to be a secretary. Only one asked how much she earned - she said her salary was pounds 8,000.

She was "amazed" at how easy it was to accumulate credit by just showing her cheque guarantee card as proof of identity.

In most cases, she had only to supply her name, address, bank details and employer's address.

Nick Bussey, chairman of the Money Advice Association, was concerned by the findings of our probe.

"It is very easy to get instant credit and spend now and worry later - particularly with store cards,"" he said. "These cards are very tempting, especially when they have money-off offers. We see cases where people get depressed, spend to cheer themselves up and get in serious debt."

He added that shop cards had "above-average" interest charges compared to credit cards because they were easier to get.

Pressure groups now want stores to check people's ability to pay BEFORE they grant them cards or instant credit.

But Elizabeth Stanton Jones, the British Retail Consortium's director of retail and finance services, says: "If Kate had said she was a student, she would not have been dealt with in the same way.

"As soon as all these applications were processed, she would have been caught. If she had spent any money, she would have owed that.

"If this was going on to any extent, the first people to worry about it would be the retailers."

But if Kate had spent even a fraction of the money she was offered instantly, she would have been thrown into serious debt. If she'had spent the maximum pounds 3,259 and paid only the five per cent minimum payments, she'd have been forced to fork out pounds 99.07 for her first payment.

Plus she would have needed to cough up a further pounds 274.68 to pay off her first interest- free instalments - a total of pounds 373.75 in the first month. Kate said: "There is no way I could afford anything like that. I have pounds 40 a week to live on during term-time which I buy my food with.

"I couldn't believe how easy it was, especially in the electrical shops. With Christmas coming up, I could easily be tempted to go out spending."

Kate turned down all the offers and returned documents. Here's what happened when she approached stores:


Kate was offered an immediate credit limit of pounds 250 within minutes of arriving at the store simply by showing her cheque guarantee card.

She was asked to fill in an application form, but no one even asked what she earned. After a telephone call she was offered instant credit.

The card, which can also be used in Tammy Girl, offers an APR of 26.3 per cent (if paid by direct debit) 29.9 per cent (other means).


The application form for the Principles Privilege Card, also used in Dorothy Perkins, Topshop and Evans, didn't ask for employment details or salary.

After filling in the form the shop assistant made a brief phone call and credit was granted.

Kate said she fancied a pounds 75 dress and was offered pounds 300 credit with 10 per cent off her purchase.


Dixons don't have a store credit card but offered Kate interest- free credit for six months on a pounds 399.99 Sony stereo.

She wasn't asked to fill in a formal application form. Instead she gave her name and address and the repayment details were printed out at the till. She was not asked about her earnings.

Kate also had to show her cheque guarantee card and driving licence.


After choosing a TV and video recorder costing pounds 409, Kate was told she only needed to provide proof of identity and where she lived - but not her earnings.

Argos executive director Peter Fishbourne said: "A cheque guarantee card or credit card must be produced.

"These cards need to be checked as valid and there has to be second proof of identity."


She wanted to buy a suit costing pounds 135. After filling in a form asking her salary details, she was readily offered pounds 500 credit.

M&S media relations manager Chris Larkin said: "The information is run through a credit scoring system which evaluates a number of criteria which she must have met.

"It is certainly not M&S's way to use hard-sell tactics."


Kate was given pounds 300 on the store's Sears Card after saying she wanted to buy a pounds 199 coat. She was asked to fill in a form and, once done, granted immediate credit. No one checked her earnings.

The card can be used in numerous shops including Dolcis, Wallis, Richards and Warehouse.

A spokeswoman for Sears, owner of the chain, said they did not want to comment.


When Kate said she wanted a winter coat costing over pounds 200 she was immediately offered a Hobbs account card with a credit limit of pounds 300.

She filled in the usual form - which did not ask her salary. She WAS warned she would have to pay back the money over three months by direct debit at pounds 100 a month.

A Hobbs spokeswoman said they did not want to comment.


Kate only had to produce a driver's licence and cheque guarantee card - but not proof of earnings - to get a 28-inch Toshiba TV for pounds 800.

The store told her she could pay it off over 12 months if she put down a 20 per cent deposit.

A spokeswoman for GE Capital, the finance house which runs accounts for Currys, Dixons, Principles and Etam, said they were not in a position to comment.
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Copyright 1997 Gale, Cengage Learning. All rights reserved.

Article Details
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Title Annotation:Features
Author:Graham, Polly
Publication:The Mirror (London, England)
Date:Oct 24, 1997
Previous Article:BEST BUYS; SHOPPING.
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