No-interest, no-payments credit card leads to no fun - Address glitch means late fees pile up as bills returned to sender

No-interest, no-payments credit card leads to no fun - Address glitch means late fees pile up as bills returned to sender
By Jon Yates
Copyright © 2010, Chicago Tribune
June 6, 2010
http://www.chicagotribune.com/business/problemsolver/ct-biz-0606-problem-gow-20100606,0,590974.column


Kevin Gow loved everything about his new house — except its old appliances. So after closing on the Lake Zurich home in May 2009, Gow went appliance shopping at Sears.

As luck would have it, the department store was running a special. If he signed up for a SearsCharge PLUS credit card, offered through Citibank, he could make no payments for an entire year. Better yet, he'd also get a 12-month reprieve on interest.

Gow applied for the credit card and promptly charged a stove, dishwasher, refrigerator, washer and dryer. The grand total: $4,681.93.

He returned to his apartment and realized his new house came with a yard. So the next day, he returned to Sears for one more item — a $159.99 weed trimmer.

If he had known then how much trouble the weed trimmer would cause, Gow would have paid for it with cash.

Unbeknownst to him, the weed trimmer was not part of the "no interest, no payments" promotion.

It would not have been a problem had the Sears employee typed in Gow's information for the credit card correctly. Because he hadn't yet moved, Gow gave the address of his apartment. Instead of typing in apartment 732, the Sears employee entered just 73.

For months, Citibank sent Gow's bills to the incorrect address and they were returned to Citibank.

Gow, who assumed he wasn't receiving bills because he was not required to make payments for a year, had no idea the bills were piling up in some faraway Citibank office, or that finance charges had kicked in.

By the time Citibank turned Gow's account over to a collection agency in January, the late fees and interest on the weed trimmer had grown to a startling $1,078.79.

Although Citibank had never contacted him about the missed payments, the collection agency had little trouble finding him. In April, Leading Edge Recovery Solutions sent Gow a letter saying he owed the full amount for his appliances, his weed trimmer, and the still-growing fees.

Leading Edge Recovery Solutions offered to let him settle his $5,981.54 balance for a mere $2,392.54.

Gow couldn't believe his eyes. He checked his credit report and saw the unpaid charges had been reported to the credit bureaus, severely damaging his credit rating.

He immediately called Sears, which referred him to the collection agency. He called the collection agency, which referred him back to Sears.

"I was kind of in credit resolution limbo," Gow said. "I couldn't get a straight answer from anybody. The collection agency didn't want to hear my sob story. Obviously, they just wanted to get their cash."

He wrote a letter detailing the mix-up and sent it to Sears, Citibank, the collection agency, the Illinois attorney general's office — and What's Your Problem?

The Problem Solver was the only one who responded.

Gow said he gave Sears his cell phone number when he signed up for the credit card, so he should have been contacted when his bills were sent back. Had he known he owed on the weed trimmer he would have paid it off immediately, he said.

"I never received a phone call," he said. "With one phone call, I could have rectified this immediately."

Gow said he could have paid the $2,392.62 to the collection agency and saved himself some money. He decided not to, he said, because he felt that would be admitting he did something wrong. Worse yet, it would have had a long-lasting impact on his credit report.

"I have a great credit score," he said. "I always pay my bills on time. I'm not looking to get out of what I owe. I'm just looking to owe it properly."

The Problem Partner, Kristin Samuelson, called Sears spokesman Larry Costello. Costello then consulted with his colleagues at Citibank.

In late May, a Citibank representative called Gow and agreed to erase the more than $1,000 in finance charges and late fees. Citibank also promised to correct his credit report and begin a new billing cycle with the original charges intact.

"The slate's going to be wiped clean," Gow said. "The biggest thing is not my bill, but that my credit is going to be corrected."