9 July 2009
It has been well noted recently that one of the healthiest areas of lending is ‘buy now pay later’ finance available on the high street. People taking advantage of low or no interest deals are shopping prudently are making their cash go further by spreading the cost of high-value essentials such as sofas and white goods over a period of months. With the downturn in high-street spending, it seems that every retailer is getting in on the act and offering tempting finance deals.
But what if you didn’t have the pick of these retailers? If your credit history (or lack of), the fact you were on benefits or your age prevented you from applying for the best deals available?
You may turn to a specialist rent-to-own company, a company that rents all sorts of goods from games consoles to plasma tvs with pay weekly, monthly or upfront options. A company such as BrightHouse. With 179 stores so far, it’s the biggest such chain in the country.
The trouble is, it’s not exactly a cheap option, this chain offers an eye-watering 29.9% APR and that doesn’t include extras like the optional service cover which most customers take out. In the end, you may up paying two or three times the cash price for the item.
With buy now pay later becoming ever more popular during the credit crunch, BrightHouse took advantage and, during the spring, ran an eight-week intensive marketing campaign including TV commercials and a leaflet drop and employed- for the first time- TNT’s Home-in Targeting postcode modelling tool for precise targeting. It worked, with the chain thriving and planning on adding 20 stores during 2009.
BrightHouse head of marketing Alan Beesley said. ‘Brand awareness of BrightHouse has grown rapidly thanks largely to our TV activity, which comprises of advertising and sponsorship of the Trisha Goddard Show. As we continue to open in new locations across the UK our highly targeted spring marketing campaign will support our growth by promoting the brand as a customer-friendly weekly payment store.’
With such an increase in awareness however, has come an inevitable rise in unhappy customers. The company recently hit the headlines when it was investigated by BBC radio 1’s Newsbeat programme.
Complaints had been made to the BBC from customers claiming that BrightHouse used threatening, bullying and rude behaviour towards them if they fell behind on payments. Customers were apparently ‘hounded’ by calls from staff urging them to borrow money from friends and family, had employees turn up on their doorstep trying to talk their way into house to repossess goods the day after a missed payment and threatened with police action.
Technically, on any rent to buy or buy-now-pay-later scheme, the item doesn’t belong to the customer until the final payment is made, and goods may be repossessed if payments fall into arrears. However, there are very strict guidelines governing how companies can do that. Without a court order, NO ONE can gain entry to your home to repossess goods.
The many complaints seem to be backed up by ex-staff who have claimed that talking their way into houses to reclaim items was exactly what they were encouraged to do. One former employee spoke of taking playstations back just before Christmas, women crying and even removing goods from a dead woman’s home.
BrightHouse director Hamish Paton denies that’s how the company operates although he didn’t want to discuss individual customers. He claimed that 96% of customers are satisfied with their service and that repossession is a last resort- goods only being taken with the consent of the customer. He also said that if guidelines weren’t being followed, he apologised and that he was keen to put any less-than-perfect service right.
Chris Tapp director of charity Credit Action is keen to have the company investigated, as he’s seen an ‘enormous’ rise in the number of people getting into difficulties with this type of company. With a staggering 40% of BrightHouse customers receiving state benefits, it seems that number may keep rising.
Newsbeat have forwarded on details of its investigation to the OFT who said they are looking into the complaints.
Although weekly payments may seem small and affordable, just remember that the items are only ‘rented’ until the final payment is made, and it may end up costing a lot more in the long run.