CATALOGUE shopping sites have been accused of “discrimination” and “profiteering” after it emerged they are legally charging female customers a higher rate of interest on credit than men.
Similar to the tactics used by store cards – which money-saving expert Martin Lewis refers to as “the devil’s debt” – JD Williams charges customers a hefty rate of interest to buy now and pay later.
The JD Williams catalogue and website boasts women’s fashionwear from top brands including Hunter, Monsoon and Toms.
But The Sun can reveal the womenswear and home shopping catalogue charges interest at 39.9 per cent APR, while its sister website flogging menswear charges much less.
Jacamo, the popular shopping site promoted by former England cricket captain Andrew Flintoff, charges interest at just 24.9 per cent.
So the company that owns both sites, N Brown, is effectively charging women more for credit than men.
There is no suggestion Flintoff in any way approves of this and he could not be reached for comment.
The staggering difference in costs means female customers who spend £150 at JD Williams would pay back 60 per cent more in interest over a two-year period than a male Jacamo customer.
Former England cricket captain Andrew Flintoff is a brand ambassador for Jacamo and has a clothing name named after him on the website
Customers who spend £150 at JD Williams and pay the balance off over two years shell out a total of £220.08 for their goods.
That’s £70 more than the original amount spent.
But Jacamo shoppers spending the same amount would pay back £191.96 – that’s just about £40 more than they originally spent.
This £150 pale grey leather biker jacket would cost JD Williams customers more than £220 over two years
This means female shoppers shell out £28.12 – or a whopping 60 per cent – more in interest than men.
And because companies providing credit only have to state their “representative” APR interest – what they must offer at least 51 per cent of its customers – the rest of its shoppers could be paying considerably more.
This £150 Under Armour jacket costs Jacamo credit customers much less than what JD Williams would pay
Justin Modray, founder of Candid Financial Advice, said: “It’s shocking to see the same parent company charge a much higher rate on credit aimed at women than for men.
“This looks like a clear case of discrimination and profiteering.”
The cost of this dress or pair of wellies racks up much more quickly at JD Williams than the same priced items at Jacamo
In a major victory for The Sun’s Stop the Credit Rip-Off campaign, the financial services watchdog has announced plans to clampdown on catalogue companies from next spring.
They’ll have to be much clearer about the true cost of buy now pay later deals and help customers in persistent debt repay it more quickly.
WE never want you to pay more than double the amount you’ve borrowed – whether it’s for a new sofa or a loan to help pay your bills.
That’s why The Sun has launched a campaign calling for a cap on the total cost of rent-to-own loans and doorstep lending at double the original price or loan amount.
In a major victory for our campaign, the City watchdog, the Financial Conduct Authority, is now consulting on the move, that could come into effect as soon as April 2019.
Also planned is a crackdown on catalogue and store card debt.
The regulator is proposing the following changes:
To clearly explain to shoppers the implications and costs of not repaying within an offer period
Prompting customers when offer periods are about to end and encourage repayment
Give shoppers more say in whether their credit limits are changed
Provide more help to customers in financial difficulty
Help customers in persistent debt repay more quickly
It’s time to Stop the Credit Rip-off. Click here to sign the petition.
Modray said: “When it comes to store and catalogue cards, companies generally appear to charge as much as they can get away with.”
Parent company N Brown has 4.45 million active customers.
Some 8.7 per cent of its customers with credit accounts are in arrears and around 40 per cent are only making the minimum repayments on their borrowing each month.
James Daley, founder of Fairer Finance, said: “It seems very strange that N Brown is charging so much more for customers of one brand than another – and 40 per cent is far too high for this kind of credit.
Jacamo charges a hefty rate of interest but women pay even more at sister brand JD Williams
The group made £922 million from sales last year – some £270 million of which came from the financial services it offers, such as credit arrangements and insurances.
“A major concern is that these kind of point-of-sale credit products encourage people to borrow when that may not be the best decision for them.”
The JD Williams website has an emphasis on the practicality of its credit account for customers.
It offers alerts when users reach their limit, helpful payment reminders and the ability to check your balance on the go so that customers are “always in control”.
How much interest are you paying for your catalogue shopping?
Despite this, customers are not told what the total amount they will pay will be when they take credit out over an extended period.
Daley added: “I think companies offering this kind of point-of-sale credit should be forced to offer customers the chance to shop around, perhaps by providing details of the average rates alongside their offer or directing users to a comparison site to compare deals.”
WHEN you shop with a catalogue company, the buy now pay later deals on offer can be hard to resist – especially if your cash is tight and you want to spread the costs.
But before you spend and land yourself with a big bill, here’s how catalogue credit works.
What is catalogue credit?
It’s when a company lets you buy something and pay in instalments over an agreed period.
Interest is charged on the amount you owe so you typically end up paying more than the upfront cost of the item.
Some catalogues offer an interest-free period.
Is it expensive?
It’s not as expensive as a doorstep loan or payday loan but it’s usually far more expensive than the interest you would pay on a credit card or standard loan. Typical credit card interest is around 19% compared to around 30% for catalogue credit.
Are there any pros?
If there is an interest-free period and you know you will be able to pay the full amount within that time then it can be a handy way to spread the cost of buying something. But if you don’t pay back the full amount within this period the charges will quickly start racking up. There are usually charges for late or missed payments and these can affect your credit score.
Meanwhile, at Jacamo, the focus is on perks and laddish talk with offers of money off, free delivery, birthday bonuses and exclusive discounts “just because we can”.
Daley added: “Most people will be able to get significantly cheaper credit elsewhere.
“Borrowing at these high rates could consign customers to debt for much longer and leave them paying hundr of pounds more in interest than they need to.”
Commenting on behalf of JD Williams and Jacamo, Stuart Daniels, director of credit risk and fraud at parent company N Brown, said: “When we significantly reduced our APRs on both Jacamo and JD Williams last year, our aim was to broaden the appeal of our credit offer.
“The headline APRs chosen formed part of a test to understand the extent to which lower interest rates attract more customers from different demographics.”
He added: “We are not required to provide a ‘total cost of credit’ example when we advertise our credit account, though we do provide a representative example in the account setup process once the customer has registered their interest in the credit account and before they apply.”
Daniels said that over half of the company’s customers pay on a credit or debit card and that opening an account doesn’t mean customers necessarily incur interest, as they can pay down the balance in full at any time.
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