MPs target credit-card touts; A burgeoning trade at airports is only

The high pressure selling of credit cards at Scottish airports came under sharp attack during a debate in the House of Commons last week, when the banning of credit-card cheques was also demanded. Travellers at Glasgow Airport in particular are being targeted by credit-card touts, who bombard them with free gifts to entice them into signing up.

Edinburgh North and Leith MP Mark Lazarowicz said there had been an increase in "heavy-sales tactics" at airports, in which reps approach people on their way to flights and ask them to commit to credit agreements.

MBNA is one company which uses "agents" to sign up customers. But evidence is emerging that some travellers have no idea what it is they are signing. Lazarowicz said: "The would-be customer may have been travelling for hours to get to the airport and may be about to fly. In some cases people are told that if they sign up for a credit card on their way to their holiday, they can have extra money to spend.

"In many other cases, there is a free gift such as a Filofax. We would not allow such a sales technique in airports or railways for other professional services, so it must be challenged."

His comments came in a debate on the Treasury select committee report into transparency of credit-card charges and conditions. Money Advice Scotland is also concerned about the harassing of travellers at airports and has complained to MPs. Committee chairman, Dumbarton MP John McFall stressed that it could be a long struggle to bring all credit institutions into line, and that his inquiry was on-going. He hoped to invite the banks back for discussions in July or September.

He said: "Our business will not be finished until the industry gets itself into shape."

He was also critical of the approach of the Financial Services Authority and its chief executive John Tiner towards the thorny problem of APRs (annual percentage rates).

He warned: "I have a special message for Mr Tiner and the FSA whose website states, 'You do not need to know how to work out an APR. The important thing is that APRs show the cost of borrowing on a standard basis. So you can compare one APR with another.'

"Wrong, wrong and wrong again. I would like to think that by the end of the week, Mr Tiner will have got his skates on and that message will have been taken off the website."

However, it was the scandal of credit-card cheques that most infuriated MPs, several of whom called for them to be banned.

This is the widespread practice whereby credit-card companies post unsolicited cheques for several hundred pounds to customers. These cheques are often sent out around Christmas and the holidays when family budgets are under pressure. There is some evidence those in tighter financial situations are specifically targeted.

Customers do not realise that interest begins to ratchet up extortionately above that of the card itself at an alarming rate.

James Plaskitt, MP for Warwick, said: "Credit-card cheques are sent to about 16% of households - five million in all - and almost every dispatch of such cheques is unsolicited. Evidence suggests that in the sending of cheques there is some concentration on households that are experiencing some form of financial difficulty. Only a third of people who received cheques in the post realised that they would incur interest right from the point of cashing them."

These comments were echoed by Lazarowicz who said: "I have come to the view that there is no way in which their marketing can be made acceptable."

He drew attention to a (pounds) 200 credit-card cheque with a letter advising him that the cheque was a "great way" to give his finances a boost and that all he needed to do was sign and date it and pay it into his bank account.

He added: "What a great way to give one's finances a boost - borrowing money at perhaps 30% interest and putting it into a bank account that pays nothing like 30%, but only 0.5%, or slightly more if one is lucky. Marketing material that relatives of mine received even suggested that credit-card cheques would be an ideal way of paying for a Christmas present or providing holiday cash."

Copyright 2004 SMG Sunday Newspapers Ltd.
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