MSE News: The ‘Great 0% ads scam’

battyboimatt

As Trump would say. Fake News.

robin58

So it's a 'scam'

So why are MSE promoting these deals with a big fanfare on this weeks email saying 'you could save 1000's' but according to the small print l can't.

jamesd

You can save (or make by stoozing) thousands but the advertising isn't as clear as it might be about what you can expect to get, with you usually not really knowing until after you've applied and reduced your chance to get a deal elsewhere if you don't like the terms of the deal you really get. You could say:

1. apply to card A that says 40 months but after a hard credit search get 24 months.
2. apply for card B that advertises 36 months and would have given you 30 months but now with the extra search making your credit record worse will only give you 20 months.

This means that card A not telling you that you will get 24 months has cost you the ability to get 30 months from card B. If you'd have known before the hard search you'd have moved on to B before completing the application for A.

What A has done is bait and switch advertising that has made both you and card issuer B worse off.

So there is a clear financial incentive to mistreat applicants in this way which needs to be countered somehow. Quotation searches with "no worse than x if you gave us accurate details" undertakings are probably the best solution for those doing online comparisons but the advertising and percentages getting the advertised terms also seem to need work, either via trade body code of practice or regulation.

jamesd

In CP 17/10, mainly about persistent debt, the FCA makes the observations below in respect of this issue. Is the MSE story a response to the FCA after having taken its position into account? There appears to be some linkage given the mention of further work in both the MSE story and the FCA's observations, so it appears that some congratulations to MSE are in order for at least some initial results.

"1.19 As noted in Annex 1 of the CCMS final findings report, a number of respondents to the interim
report drew attention to an issue regarding credit card firms’ offers of 0% introductory periods
for purchases and balance transfers. Since then we have taken supervisory action in a number
of cases where we found firms’ financial promotions for such offers did not make clear that
the length of the introductory period was subject to a customer’s status, and as such was not
available in full to all customers whose applications were accepted. Following our action, the
firms in question amended their promotions to make this much clearer.

1.20 We would like to take this opportunity to remind firms that there are a number of relevant rules
in this area, including the high level requirement that financial promotions must be clear, fair
and not misleading. Firms must also ensure that each communication and financial promotion
is presented in a way that is likely to be understood by the average member of the group to
which it is directed and does not disguise, omit, diminish or obscure important information
or statements. In relation to APR, our rules require that at least 51% of customers should be
expected to be charged the representative APR or better.

1.21 In our view it should be obvious to firms that financial promotions for credit cards with 0%
introductory periods should represent a genuine offer, and make clear, if it is the case, that
the advertised period is a maximum and that shorter periods may be offered to customers
depending on their circumstances. We would have concerns if the headline rate or period were
not available to a significant number of consumers or if any limitations on its availability were
not made clear. This is an area where we will undertake further work during the course of the
year to look at the issue and consider the case for additional rules or guidance if necessary.
If we decide to propose new rules and guidance we would consult on this alongside any
proposals on changing repayment options, as discussed in Chapter 6."

phillw

jamesd wrote: »

1. apply to card A that says 40 months but after a hard credit search get 24 months.
2. apply for card B that advertises 36 months and would have given you 30 months but now with the extra search making your credit record worse will only give you 20 months.

I'm pretty sure they know that it penalises people who are trying to shop around for the best deal. So don't expect anything to change any time soon.

The ASA should ban "up to" in advertising. It's always predatory.

jamesd

I'm sure both the FCA and card issuers know it but the FCA seems to have at least some interest in improving disclosure, unlike the firms, which can benefit by hiding things.

I don't agree that up to is always predatory in advertising. If there is disclosure of what you'll get before an application search it could be fine.

takman

The problem with this is that there are no facts or figures showing what percentage of people actually get the headline 0% length.


Personally i have never got less than the headline 0% length on any card i have applied for in the last 5 years (roughly when i first got a 0% interest card).


So MSE should do a survey and see what percentage of people get a lower 0% length compared to the people who get the full length or are declined.




But if this is forced up lenders then i can see an easy solution for them. They will have a different credit card for each length of 0% interest they offer. If someone applies for the longest offer then 100% of those accepted will get it and if someone gets declined then they will be offered a different card with a shorter 0% period.
So this will meet all the suggestions in the article and won't make any difference to the lenders or customers.

oldagetraveller

No interest to pay on purchases for up to 28 months from account opening. We may offer you a 0% interest period of 25 or 22 months depending on your individual circumstances

The above copied and pasted from Tesco Credit Card. Looks clear enough to me if applicants took the trouble to read it!
I would assume that if a shorter period were to be offered then it would be advised of during or after the application. If not that would be naughty but not a "scam".

Chrysalis

poor article I feel.

When I applied for my barclaycard I was aware it was an "up to" period, so they placed that text well enough that I noticed, I did actually get the full interest free period as well.