Marks and Spencer has scrapped plans to automatically replace its store card with a credit card following action by the Office of Fair Trading (OFT).
M & S storecard holders were to receive these
The retailer's financial services arm had planned to replace millions of store cards with its new '&More' credit card without asking customers' permission.
The retailer said the onus was on the customer to contact them if they objected to the switch.
But the company has been forced to rethink the scheme after pressure from the Office of Fair Trading (OFT).
Marks and Spencer argued it was not breaking credit laws barring the issue of credit cards to consumers that had not requested them, as store card customers already had a credit agreement with the company.
But the OFT said Marks and Spencer did not have the right to change one type of card into another in this way.
Marks and Spencer said it had only planned to send the new credit card to people it had checked for "credit worthiness" - about 2.6 million in total.
As a result, more than 900,000 customers were to be left with their existing storecard.
The credit card has a lower interest rate of 14.9%, compared with the charge card's 18.9% - and customers can collect loyalty points on all their purchases.
Under the revised plans, M&S customers who receive the new &More card will not have to contact the company if they prefer to retain their existing store card.
If they wish to replace their store card with the new credit card, they must contact the company by telephone.
According to the OFT this should reduce the element of 'inertia selling'.
John Vickers, OFT Chairman said:
"Inertia selling of credit can have damaging consequences for consumers.
"In this case Marks and Spencer Financial Services (MSFS) has agreed to take practical steps so that consumers will move from store card to credit card only if they positively make that choice."
In response, an MSFS spokeswoman told BBC News Online that the decision to backtrack was only a minor inconvenience to the card's launch.
"After discussions we have made a small operational change which doesn't affect the roll out of the new card and we do not expect it to affect take-up of the card," the spokeswoman said.
However, David Benady contributing editor of Marketing Week magazine told BBC News Online that Marks and Spencer were being unrealistic in the claim that their decision would not impair the successful launch of the new card.
"It would be incredible if they get the same level of response...maybe they are a bit embarrassed by the attention that has been drawn by this furore."