The Great MBNA/Virgin Interest Rate Escalator Trick

[MacBoy]

All

 

Hi from a CAG member currently residing in the Halifax Forum

 

I've noticed one or two threads about this MBNA con-trick targetting the most vulnerable customers in here, so I thought I'd start another to bring this together and hopefully provide a little insight and help.

 

I have just got off the phone from them this morning to tackle the latest letter and have succeeded again in resisting their proposed rise - this time a whopping 6% .

 

Background

I have a high balance on a Virgin Card (although nowhere near the limit), which was blocked and my interest rate increased about 2 years ago because of some detrimental information that appeared on my Equifax file (mortgage arrears caused by Alliance & Leicester's incompetence at moving my direct debits when i changed my current account to them from Halifax).

 

Ever since this time (and although the mortgage account was subsequently brought up to date with no other detrimental info on any of my credit files), the block has remained in place and I have had a standard letter every six months (like clockwork) from MBNA/Virgin; giving me a month's notice of an impending interest rate increase (a hefty one, bearing no relation whatsoever to movements in the money markets).

 

Tellingly, the letter is invariably signed off by some arbitrarily-named (and probably non-existent) Marketing Manager/Director.

 

My experience in dealing with it

I have so far succeeded 100% in getting these rises withdrawn. I think I am onto their [problem] and I'm going to share my thoughts. Feel free to correct me if I'm wrong and help me refine this, but my approach has worked for me every time so far.

My assessment of the [problem]:

This is a selective and automated process aimed at customers with less-than-perfect account conduct. It is punitive and I believe the objectives are twofold - to squeeze these 'undesirable' clients for as much money as possible while they are on the books - and to rid themselves of those of us who are able to pay off their balances. It's the old inertia trick. Do nothing about it and you're stuffed.

 

The letter is short, sweet and fluffy - a lot of people would probably overlook it or bin it. At any rate few will question it, believing something bearing the 'I'm on the side of the little guy' Richard Beardy branding would be anything other than perfectly above board. Truth is, Beardy sold them this brand long ago and MBNA have done everything in their power to ensure that it has long since ceased to have any cachet

 

But they wouldn't do it if it didn't work.

 

How I've succeeded in putting a stop to it on my account

• Call the contact centre - remain calm and friendly at all times - try not to lose your temper.

• You will be put through to an operator. Explain that you are calling because you received an rate-increase letter and you would like to know the reason why (as the letter doesn't give this)

• You will then be given a standard (and vague) line about the fact that it isn't only you that is affected. They will stop short however, of saying that it is an across-the-board increase. They may also throw in a comment about the conduct of your account. Bite your lip.

• Explain to them firmly and calmly that none of this has been detailed in the letter, that you are unhappy and would like to escalate the matter, as you feel sure that the rate rise is punitive and has been applied selectively. You may get some guff about the fact that your agreement provides for a variable rate but stand your ground.

• You should at this stage be put through to a supervisor, where you'll likely have to go through the scenario again. This time insist that the reason for the rise is set out in a letter to you. If you encounter resistance threaten to report the matter to the FOS for investigation, stating that in order to do this you will consider raising a Subject Access Request under the Data Protection Act 1998, in order to see a copy of all the data they hold about you, in order to understand why you are being automatically selected for usurous interest-rate increases every six months.

It is at this stage that they have backed down on every occasion.

I'm not sure whether what I'm doing is 100% the legally-correct course of action, but something is obviously pressing the right buttons.

 

Good luck and please share your experiences and feedback in this thread so we can fight this disgraceful and questionable [problem] together!

 

Regards

Mac

[phatram]

Would it be better to do this in writing?

[MacBoy]

Why?

[phatram]

Cos I can't understand the people on the phone!

[MacBoy]

Yes, they're all former Brookside/Hollyoaks actors!

 

:::ducks to avoid incoming from any scouse fellow CAG-gers:::

 

I suppose it could work as a letter, would need to think about the wording though. All I know is that this has worked so far for me.

 

Good luck with it if you decide to have a go...

 

Mac

[phatram]

Dear Sir,

I recently received a letter telling me the interest rate on my Virgin account was increasing to 34.5%. I would be grateful if you explained the reasons for this rise to me as the letter did not have this information in it.

I believe this rate rise to be punitive and selective and is detrimental to your most vulnerable customers.

I shall be reporting this to the Financial Ombudsman and Trading Standards for investigation, as I believe you as a company are penalising the people who can least afford it.

[MacBoy]

Good start, phatram - Mods/Helpers - anyone care to advise?

 

I'm happy to continue to recommend doing this by phone as it works, but some may wish to write in.

[phatram]

Where would we stand if we refused to pay it?

[MacBoy]

I feel energised about this now. I've just been back on the phone to them and have asked for a letter explaining why I have been selected for these punitive periodic rate rises.

 

The manager I spoke to said she will only write to me explaining that is was a 'bank decision'. That's fine because it will provide a starting point - I intend to take this as far as I can now - they have my blood up!

[MacBoy]

Where would we stand if we refused to pay it?

Not sure - as we have signed variable-rate agreements that part would probably be covered in the T&C's. However in my view that's a red herring.

 

It is not so much about denying them the ability to vary their rates, but the selective and punitive way in which it's being applied - namely to their most vulnerable customers. This is where they start to become nervous on the phone and tend to cave in. I'm sure they are scared to death of being forced to make details of their selection methodology public

[phatram]

Ive written to them, will post reply.

Lets go get 'em !!!

[MacBoy]

Good for you Phatram!

[Dolphin2109]

Hi Mac Nice going mate

 

I didn't even get a manager to escalate to - They were in The Legendary "MEETING" (Coffee and a giggle about customers they have got more interest from to meet their bonuses) - got another agent who told me they spoke to a manager - (within 2 minutes is that possible) and they are gonna keep the interest rate as it is at lower rate but couldn't send out a letter so will see on my next statement . if its changed i got the name and id number so i guess we will see.

[MacBoy]

Great stuff Dolphin - well done!

[MacBoy]

It seems that Capital One are also now engaged in this questionable practice. I had a letter this morning saying that 'based on an account review' (I have a high balance, but monitor my credit record and there have been no negative changes to this since I toook out this card). they are going to increase my interest rate by a WHOPPING 7% APR

 

I've requested a management callback and will keep you updated, I may also cross-post in the Cap One section.

 

Looking at the agreement, it seems that on the surface of things they can probably do this legally, but I am becoming more and more convinced that due to the:

 

• Apparent selectiveness of the process - i.e. the active targetting of the most vulnerable and the punitive nature of the changes

 

• The sheer amounts of increase involved

 

..that there may be some mileage in challenging this. I'm wondering if these rises could be possibly construed as (dare I say it) penalty charges? I would welcome input from any legal eagles/mods etc if possible.

 

Thanks in advance

Mac

[MacBoy]

UPDATE

Another callback today. It seems that they may be backing down in my case, but the person calling me used fairly weasly and vague language, so I'll be reserving judgement until the clarification letter I asked for (along with my original CCA) arrives. I'll let you know what transpires.

[MacBoy]

Hmmm.. that was strange! My last post appears to be slotted in before a previous one. How odd. Mods?

[MacBoy]

UPDATE

 

Got the management callback. They're not backing down. Have asked them for a more detailed letter asking for the specific reason that I was selected for this penalty. They say they will comply.

 

I have also requested an original copy of my CCA.

 

Keep you posted

[phatram]

Take a look here at the letter they sent me,

http://www.consumeractiongroup.co.uk/forum/mbna/111016-mbna-virgin-credit-card.html

[MacBoy]

I'm reposting this for clarification as due to the CAG system clock incident yesterday, what should be my latest update is still halfway up the page

 

UPDATE

 

Another callback today. It seems that they may be backing down in my case, but the person calling me used fairly weasly and vague language, so I'll be reserving judgement until the clarification letter I asked for (along with my original CCA) arrives. I'll let you know what transpires.

[Gump]

Hi,

 

I no longer have my MBNA/Virgin card but they're definitely on my hit list along with Natwest and Paragon.

 

Something else I noticed which I thought was particularly dodgy about them though was that they shifted the direct debit / statement payment date, apparently on a four weekly basis, rather than monthly as would be expected, so that payments would suddenly be before the first of the month, so effectively before you expect and usually before you get paid!!

 

As there wasn't any money in my account at the time it happened to me they used that as an excuse to whack on more charges and interest!

 

It was this, their ppi, and their high interest rates that persuaded me to get rid of it. Seems like another clever way of extorting money from the people who can least afford it, I had a high balance at the time...

[MacBoy]

There is definitely a scienctific, systematic rip-off going on Gump. Using a combination of advanced mathematical software and the nooks and crannies of their Ts & Cs, they will bleed you dry for as much as they can.

[Gump]

The question is if their constant access to credit files legal?

I know they said things to me which made me also believe they had that capability. Pity but I can't remember anything more specific about it now.

[MacBoy]

Gump

They have to declare every time they make an enquiry about your files to a CRA (it shows on your credit file as an 'Enquiry'), but don't forget they also have their own extensive data on customers which they can access , manipulate and mine at will.

[Marj]

Hello

 

Am new to the group but very glad I found it. I also have a Virgin/MBNA card with a 0% transfer that is coming to an end. I called them last Monday as wanted to confirm the interest rate which they confirmed to be 16.9% and also transferred more money from another card (highter interest) as haven't been able to get a new 0% card. This meant that I am up to my limit but the limit is not huge (

 

I then received a letter on Friday telling me that the interest will be 29.9% from the day after my March statement date and that they wanted to give me "plenty of notice" - what a laugh! Needless to say, I was furious. I am thinking of calling the CCCS and then do as Mac has adviced. But wanted to actually know if I should bother with CCCS? Am just so incredulous that this could actually be legal.

 

Also, I have a Virgin telephone & broadband contract coming to an end and as am so infuriated with this thing that am thinking of going with another provider although not sure I would really like to. Am just a bit unsure if it is actually Virgin I should be mad at?

 

Unfortunately, I am not in a situation to pay off the debt (have tried three or four cards and one personal loan), quite the opposite in fact and feel that this is why they have targetted me :'-( Am having sleepless nights just thinking about the situation. All help very welcome and sorry for the longwinded post.