M&S criticised over &more card
OFT wins concessions on customer upgrades to new credit card
October 8 2003
Marks and Spencer has agreed to amend the conversion of existing store cards to its new combined &more credit and loyalty card after criticism from the Office of Fair Trading.
The OFT believed that letters sent by M&S to existing card holders could breach the Consumer Credit Act, which makes it an offence to send a credit card to a consumer unless it has been requested in writing.
M&S Money, the retailer’s financial services arm, sent out letters to many card holders saying that store cards would automatically be replaced by the &More credit card unless card holders objected.
M&S argued that it was not in breach of the law because was sending a replacement card as a result of a variation to the existing store card agreement. The OFT view was that M&S did not have the right to change one type of card for another.
MSFS has agreed that store card holders being sent the new &More card will now be told that if they wish to keep their existing store card, they need take no action. If they wish to replace the store card with the new credit card, consumers must take positive action to activate it, reducing the element of inertia selling which concerned the OFT.
The OFT has also challenged a standard term in the store card agreement that allows an unrestricted right to change the terms of the agreement. M&S has agreed, without accepting the OFT’s view, given the OFT, to make changes to the term.
The OFT accepted that M&S has acted responsibly by making a proper credit assessment of individual cardholders being invited to change to the &More offer, and on setting credit limits.
OFT Chairman John Vickers said: “Inertia selling of credit can have damaging consequences for consumers. In this case Marks and Spencer Financial Services has agreed to take practical steps so that consumers will move from store card to credit card only if they positively make that choice.”
M&S planned to upgrade 2.6m existing card customers to the new card.
