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ombudsman news

issue 107

January/February 2013

catalogue shopping

As the economic situation continues to bite and more people are finding established lines of credit closed off to them, many are turning to alternative forms of credit. Over the last year or so, we have seen an increase in the number of complaints involving different types of credit - including more complaints about catalogue shopping accounts.

Many of the complaints we see have come about because the way consumers operate their catalogue accounts can be complex.

Problems can arise where, for example, different payment arrangements apply to different items. Or where consumers missed a payment and went into arrears - because they hadn't realised that their payment date was on a 28-day cycle rather than being on a fixed date each month. We resolve many of the complaints we see by getting to the bottom of what has happened and talking it through with both sides. Relatively few complaints in this area reach the final stage in our process - a decision by an ombudsman.

And we do see some examples of particularly good customer service when things have gone wrong.

The case studies that follow illustrate some of the more common problems that we see, including:

  • disputes over the quality of items bought from catalogues;
  • adverse information being recorded on a consumer's credit file; and
  • confusion where a consumer has more than one shopping account - either with the same company or with a
    different one.

issue 107 index of case studies

  • 107/7 - consumer complains that catalogue company would not repair or replace TV that stopped working properly
  • 107/8 - consumer complains that catalogue company registered adverse information on her credit file - even though she had been paying
  • 107/9 - consumer complains that she was inconvenienced when catalogue company replaced faulty original items
  • 107/10 - consumer complains that she made payments to her catalogue account - but the company still added charges to her account and adverse information to her credit file
  • 107/11 - consumer complains that he ordered an item on a "buy now, pay later" basis - but the catalogue company made a mistake with his order
  • 107/12 - consumer complains that catalogue company recorded adverse information on his credit file after it had failed to set up a new repayment plan

107/7
consumer complains that catalogue company would not repair or replace TV that stopped working properly

A few days later, a loss adjuster came to inspect Mr and Mrs P's roof. A couple of days after that, the insurer phoned Mr and Mrs P to tell them that it wasn't prepared to pay for any of the damage to be repaired.

The insurer said that the damage was not covered under their policy because it had been caused by "poor workmanship" in the way the roof had been constructed and sealed. The insurer pointed out that Mr and Mrs P's policy said "You are not covered under your policy for any loss or damage caused by or resulting from poor workmanship, poor design or faulty materials".

In October 2009 Mr R rang the catalogue's helpline to complain that his TV had lost onnection with its aerial. He said the picture was fuzzy and that he couldn't watch certain channels. He spoke to a customer services adviser and said he wanted the catalogue company to cover the cost of putting things right, or replace the TV with a new one. The adviser told Mr R that there was nothing he could do because it had been more than six months since Mr R had bought the TV. But the adviser did point out that the TV was still under warranty, and he suggested Mr R get in touch with the manufacturer to discuss the problem.

Mr R wasn't happy with this response, and he complained to the catalogue company. The company replied, saying that there was no evidence that the TV had been faulty when Mr R had bought it. The letter repeated the information Mr R had been given over the phone - and suggested that he contact the TV's manufacturer.

Mr R was annoyed that he was paying for a TV that wasn't working properly, and he decided to stop making his monthly payments. This led to the catalogue company adding charges to his account, which meant that adverse information was recorded on his credit file. When Mr R found out what had happened, he decided to bring his complaint to us.

complaint not upheld

We needed to establish exactly what was wrong with the TV - and what had caused the problem. So we asked the catalogue company to arrange an independent assessment of the damage to find out what had caused it..

We looked at the loss adjuster's report and at the photos he had taken. Although Mr and Mrs P didn't think the loss adjuster had inspected the roof properly, the photos were good quality and we were satisfied that they showed he had carried out a reasonable inspection of the roof.

We also looked at records that showed that the insurer had been in contact about the loss adjuster's visit.

We checked the loss adjuster's experience of assessing this type of damage - and we were satisfied that he had the relevant experience for this kind of work.

We noted that Mr and Mrs P's flat roof had only been a year old when the leak had happened, so we would have expected it to still have been watertight at this stage.

We concluded that the damage was likely to have been caused because the roof had not been fitted properly in the first place. This was a workmanship issue which was not covered under Mr and Mrs P's policy.

We explained to Mr and Mrs P that their insurer was not responsible for anything that could go wrong with their roof. We also explained that our job was to look at whether the insurer had been right to decide that their claim was not covered by their policy. We had concluded that the insurer had acted fairly in turning down their claim.

But we did appreciate that the couple were dissatisfied with the quality of the roof - especially as it was only a year old. So we suggested that they get in touch with the builder who had constructed the roof to discuss what had happened - and to ask them to look into it.

107/8
consumer complains that catalogue company registered adverse information on her credit file - even though she had been paying

Mrs T had a catalogue shopping account. When she started having some financial problems, she contacted the catalogue company and agreed a new repayment plan with them. Mrs T agreed to pay £30 a month towards her account.

A few months after the repayment plan was set up, Mrs T received a letter telling her that her account "had defaulted" and that "adverse information" would be recorded on her credit file. The letter also said that Mrs T had been sent a default notice a few weeks earlier, which had explained that the catalogue company would be taking this action if she didn't contact them to discuss her repayments.

Mrs T complained, saying she had never received a default notice. She said it must have been lost in the post. She also said that she had been making payments each month, and that the catalogue company must have credited them to the wrong account.

When the catalogue provider refused to change its position, Mrs T brought her case to us.

complaint not upheld

When we looked at Mrs T's bank statement, we found that she had made some payments to the company, but we noted that the payments were not regular and were for varying amounts.

We also found that Mrs T had another catalogue account with a different company. Her bank statement showed that a number of payments Mrs T told us she had made to the company in question had actually gone to that other company.

When we reviewed the catalogue company's accounts, we found that all the payments Mrs T had made had been credited to her account correctly - and that all her payments were accounted for.

We explained our findings to Mrs T. We also explained to her that because she had not been making payments in line with her repayment plan, the company had been entitled to put her account "into default".

Although the company didn't keep paper file copies of default notices, it was able to show us relevant information from its IT system to satisfy us that it had sent out a default letter to Mrs T. We also noted that the company had the right address for

Mrs T on its system. So we concluded that either Mrs T had received it and not remembered, or that it had not reached her in the post. And in those circumstances, we took the view that the catalogue company could not fairly be held responsible.

We did not uphold the complaint.

107/9
consumer complains that she was inconvenienced when catalogue company replaced faulty original items

Ms R ran a small marketing company. She had just won a contract with a new client and was taking on some new staff. She needed some new office furniture, but didn't have the money to pay for it straight away.

So she decided to buy some new desks by taking out a credit agreement with a catalogue company.

Eight months later, the veneer on the desks started to peel. Ms R wasn't happy, and she rang the catalogue company to tell them about the problem. She said that she wasn't happy with the quality of the desks, and asked the company to replace them with a different, higher spec model. The company agreed to collect the desks and to supply the more expensive ones. The new desks cost £360 more than the original ones, and Ms R paid for them over the phone.

Just before Christmas, the new desks arrived. But when Ms R asked the delivery driver to take the old desks away, he said he couldn't take them.

Ms R rang the company's customer services helpline to complain. She spoke to an adviser and asked him to arrange for the desks to be collected. The adviser explained to Ms R that he couldn't arrange for the desks to be collected until after Christmas, and he apologised for the inconvenience. Ms R ended up having to store the old desks in her office for a month.

Ms R thought the company had handled things badly, and decided to complain. The company accepted that it had inconvenienced her, and offered to refund her £180 towards the cost of the new desks, plus £10 towards the cost of the phone calls she had needed to make to sort the situation out. But Mrs R did not think this offer was enough, and decided to refer her case to us.

complaint not upheld

The fact that the original desks had not been satisfactory was not in dispute. Our job was to decide whether the company had acted fairly in the way it had handled Ms R's complaint.

Understandably, Ms R had questioned the quality of the original desks and decided to replace them with a different model.

We took the view that by collecting the old desks and delivering the new ones free of charge, the company had solved the problem fairly and reasonably. We thought it had been reasonable to expect Ms R to pay the difference in price between the different quality desks.

However, the company had failed to arrange for the old desks to be taken away at the same time as they had delivered the new ones, which had left Ms R with a storage problem. We concluded that the company's offer to reduce the cost of the new desks - and to cover the cost of the phone calls - was appropriate compensation for the inconvenience it had caused her.

We did not uphold the complaint.

107/10
consumer complains that she made payments to her catalogue account - but the company still added charges to her account and adverse information to her credit file

Miss N had a catalogue shopping account. She usually made her monthly repayments through the catalogue's website. But when she started having some problems with her home broadband connection, she realised she wouldn't be able to make her payments in the usual way. So she rang the catalogue's customer services helpline to ask for some advice on what to do.

The adviser on the helpline suggested that Miss N make her payments in a branch of her bank - and gave her the bank details and the account reference number she would need to quote. Miss N made her next two monthly payments from her bank.

However, the catalogue company sent Miss N a letter telling her that it hadn't received the payments - and that it had recorded adverse information on her credit file. Miss N was upset. She phoned customer services. She told them that she had gone out of her way to let them know about the problems she was having with her internet connection - and to make sure her payments were made on time.

But the adviser she spoke to said he couldn't see any record of Miss N's original phone call - and that there was nothing he could do to amend her credit file. He suggested that Miss N speak to her bank to find out what had happened. Miss N was unhappy, and she made a complaint to the catalogue company. When the company refused to change its mind, she referred the matter to us.

complaint resolved

Miss N had no evidence to show that she had phoned customer services to discuss her situation. However, when we looked at her bank statements, we could see that she had made payments to a recipient with the same name as the catalogue company.

When we asked the company to look into whether they had received these payments, they told us that they had received the money. But they told us that the account reference number Miss N had quoted was for her "privilege account" - which was her storecard account rather than her catalogue account. The company confirmed that the money had gone to Miss N's storecard account, and that her catalogue account had been left uncredited.

We established that when customers made their payments to this company on its website - as Miss N usually did - they would be shown a drop-down list of accounts to credit. But because Miss N had made the payments in a branch of her bank, she would have had to rely on the payment details she had been given by person she had spoken to at the catalogue company.

We thought it was unlikely that Miss N would have knowingly made the payments using the right bank details but the wrong reference number. So we concluded that Miss N had made a genuine mistake, and that the adviser she had spoken to could have been clearer about which information to use. In these circumstances, we told the company to remove the adverse information from Miss N's credit file and to make sure that the payments she had made were credited to her catalogue account.

107/11
consumer complains that he ordered an item on a "buy now, pay later" basis - but the catalogue company made a mistake with his order

Mr V bought a washing machine from a catalogue. He wanted to spread the cost, so he decided to buy the washing machine on a "buy now, pay later" basis. He filled in the order form and the washing machine arrived a few days later.

It was only when Mr V saw his first statement from the catalogue company that he noticed his order had not gone through on a "buy now, pay later" basis. Mr V complained to the company, but it said he had never ordered the washing machine on "buy now, pay later" terms.

Mr V was unhappy with the company's response. He was convinced that he had ordered the washing machine on a "buy now, pay later" basis, and insisted that he would never have bought it if that hadn't been the case.

He also said that he had phoned customer services and been told that he wouldn't have to pay interest on the item.

The catalogue company asked Mr V what code or reference he had quoted to indicate that he had wanted to buy the washing machine on a "buy now, pay later" basis. He said he couldn't remember the code he had put on the order form, but he thought it was "BNPL". When the company refused to process Mr V's order on a "buy now, pay later" basis, he asked us to investigate.

complaint not upheld

The company told us that for a customer to buy an item on a "buy now, pay later" basis, they would need to meet certain eligibility criteria - and they would also need to quote a specific code on their order form.

The company said that its "buy now, pay later" code is made up of numbers and letters - so the code that Mr V thought he had put in could not have been right.

When we looked at the company's order management system, Mr V's order was recorded as a "normal" order - and not one on a "buy now pay later" basis. Given that Mr V's first statement also showed it as a normal order, we concluded that he was likely to have placed the order on that basis.

The company told us that Mr V hadn't been a customer with them for long enough to qualify for their "buy now, pay later" scheme. So even if he had put a valid "buy now, pay later" code on his order form (and not just the letters "BNPL"), his form would have been returned to him and he would have been asked to pay using a different credit option.

The company also told us that even though it records every phone conversation, they could not find a conversation between Mr V and customer services about his purchase being interest free.

Although we accepted that Mr V had wanted to buy the washing machine on a "buy now, pay later" basis, we were not persuaded that he had actually placed his order on those terms.

In these circumstances, we did not uphold the complaint.

107/12
consumer complains that catalogue company recorded adverse information on his credit file after it had failed to set up a new repayment plan

Mr W had an account with a catalogue. After a quiet period at work in the run-up to Christmas, Mr W was having trouble making the minimum repayments on his account.

He rang the catalogue's customer services helpline to find out if they could do anything to help. The person he spoke to said that she could set up a new repayment plan for Mr W that would reduce his monthly repayments. She also said that they would freeze the interest on his account. Mr W was relieved, and stopped making payments while he waited for the details of the new repayment plan to arrive in the post.

When he didn't hear anything for a couple of weeks, Mr W rang customer services again to find out what was happening. He was told he would receive a letter shortly. No letter arrived - and Mr W became even more concerned when his usual monthly statement for January didn't arrive either. He rang customer services, and was told again that the letter was on its way. Again, nothing arrived. This went on for several weeks.

In April, Mr W was thinking of buying a house with his partner. Before they applied for a mortgage, they both checked their credit files. Mr W discovered that the catalogue company had recorded adverse information on his credit file since January.

When Mr W rang customer services to complain, an adviser told him that late payment charges had been added to his account, and that there was nothing she could do about his credit file. Mr W was upset about the way he had been treated, and he decided to bring his complaint to us.

complaint resolved

When we first spoke to Mr W, he still hadn't received any statements from the catalogue company - so he didn't have the information he needed to make a payment.

Once we had been in touch with the catalogue company and it had sent us the information we needed to look into the case, we were able to give Mr W the information he needed to start making payments again. Mr W made a payment to his catalogue account straight away - and another payment the following month.

The catalogue company admitted that it had failed to set up Mr W's new repayment plan properly. It also told us that he had phoned them several times to find out what was happening. But it did point out that it had frozen the interest on his account, which had saved Mr W money. And it said it was not prepared to remove the adverse information from his account - because he had stopped making payments back in January.

Having weighed up all the evidence, we concluded that Mr W had stopped making payments while he had been waiting to hear from the company about his new repayment plan. And when we had given Mr W information about how to pay, he had made two payments - which we thought showed a willingness to pay.

We were satisfied that if the company had been in contact with Mr W when it said it would be, he would have made the necessary reduced payments towards his account. This would have meant that the adverse credit information would not have been recorded on his credit file.

We accepted that the company had gone some way towards helping Mr W by freezing the interest on his account for a period of time. But its failure to set up the reduced repayment plan - as it had promised - had caused Mr W anxiety. And it had led to adverse information appearing his credit file, which could have been avoided.

We spoke to the catalogue company to explain our view of the complaint. After that conversation, the company agreed to remove the adverse information from Mr W's credit file, set up his new repayment plan and pay him £50 compensation for the inconvenience it had caused him. We thought that was fair in this case, and Mr W was happy to settle his complaint on that basis.

image: ombudsman news issue 107

ombudsman news gives general information on the position at the date of publication. It is not a definitive statement of the law, our approach or our procedure.

The illustrative case studies are based broadly on real-life cases, but are not precedents. Individual cases are decided on their own facts.