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Last Updated: Wednesday, 8 October, 2003, 23:13 GMT 00:13 UK
Harrods under store card spotlight
The UK trading watchdog is looking into how Harrods went about switching its store card customers to a new credit card.

BBC News Online has learned that Harrods have been writing to customers informing them that they were to be "upgraded" from the store card to a credit card and they would have to let them know if they objected to the switch.

On Wednesday Marks and Spencer was forced to scrap plans to automatically replace its store card with a credit card following action by the Office for Fair Trading (OFT).

However, Harrods told BBC News Online that their case was different to that of Marks and Spencer, as customers would have to make a call before using their new card.

Sent without asking

In September, BBC News Online reader Simon Thomas received a letter from Harrods informing him that he would soon be sent a Gold Mastercard as a replacement for his current storecard.

I could see how people could be upset that they were sent it without even asking for it
Simon Thomas

If Mr Thomas did not want to be sent the new card he would have to phone a freephone number.

Mr Thomas did not phone and duly received the new card on 7 October.

The new card promised a slightly lower rate of interest than the current storecard and membership of a rewards program.

"I didn't mind receiving the card however I could see how people could be upset that they were sent it without even asking for it," Mr Thomas said.

Changing tack

On Wednesday, the OFT described a similar move by Marks and Spencer as relying on "inertia selling".

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.

We have endeavoured with this new product to be as transparent and open as possible
Peter Willasey Harrods spokesman

The OFT view was that Marks and Spencer did not have the right to change one type of card into another in this way.

As a result, the retailer changed tack and said that customers that wished to replace their store card with the new credit card must contact the company by telephone.

Robust

The gaze of the OFT has now turned to the migration of Harrods store card customers onto a new credit card.

"We are aware of the Harrods scheme and are looking into it but cannot comment further at this stage," an OFT spokesperson said.

In response, Harrods rejected charges of "inertia selling" and pointed out that customers would have to phone before their replacement card became operable and this proved a willingness to accept the switch.

"We have endeavoured with this new product to be as transparent and open as possible...we believe we have answered many of the questions raised by the Marks and Spencer case in a robust manner," Peter Willasey Harrods spokesman told BBC News Online.




SEE ALSO:
Harrods cuts Royal ties
09 Jul 00  |  UK News
Harrods loses Royal Warrant
13 Jan 00  |  UK News
'Too fat for Harrods' woman to sue
15 Dec 97  |  UK News


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