New love is a precious thing, particularly when money is involved. When a company is trying to woo you, it is so attentive and caring, and promises you a love that will burn with an unquenchable flame. But if the relationship hits a rocky patch or ends on anything but its own terms (terms written in a tiny font over 32 pages) the recriminations can be bitter. And they can be swift.
A reader contacted us recently after falling foul of Bank of Ireland. She wanted to transfer €600 from one of her accounts to another using its online banking facility but added an extra zero by mistake, which led to €6,000 going between her accounts. It took 24 hours to resolve the problem, during which time she briefly went into the red in one account.
She thought nothing of it until a letter arrived from her bank warning her that she had crossed a line and any further transgressions would lead to it failing to honour future payments. The bank said this could lead to her falling into arrears on her mortgage or utilities. This woman has had an unblemished record with the bank spanning more than four decades, and when she contacted it to express her disquiet at being addressed in such a fashion she was brushed off.
Another reader got an aggressive letter from Ulster Bank. Like many of us, this woman overspent at Christmas, and in early January her current account was feeling the pain. A number of direct debits and standing orders came out of the account, leaving it fairly bare. Then three letters came within days of each other. The first two were rather breezy and then the third one arrived. It read, "Things are at a serious stage now. You've made a large number of payments recently that you didn't have enough money in your account for. Because you used your debit card we had to pay these for you. To stop things getting any worse we need to cancel any chequebooks and cards connected to your account. If we don't receive them straight away we might have to ask a card recovery agent to come and collect them from you."
Really? People are going to call round to her house and take her cheque book? It seems unlikely. “I think we were €300 in the red, and this might have happened three or four times in the last few years. The account was back in credit within two or three days,” she says.
We contacted both Bank of Ireland and Ulster Bank, but at time of going to press had received no response.
The head of the Consumer Association of Ireland, Dermott Jewell, believes such correspondence is evidence of a breakdown in the relationship between banks and customers. "The gloves are off now and the level of customer service has collapsed. They will claim they have been told to be more rigid but the reality is they know they can act with impunity because there is no proper competition."
Correspondence from some service providers makes the banks’ approach look almost genteel. Sky Ireland’s policy of passing on tiny debts to a collection agency has been highlighted.
One pensioner who contacted us was pursued by Sky and its debt collectors for €23. Another was cut off when there was a mix-up over a payment. As he didn’t want to continue the service, he agreed to pay up to the point they cut him off. Sky, however, insisted he had to pay up to the expiry of the contract. He got a letter from a debt-collection agency demanding €58. We got in touch, and Sky stopped pursuing him, but it said it was “satisfied” its “standard debt recovery process was followed”.
Last week, a reader contacted us after LA Fitness, of which she had been a member for 12 months, referred her case to a debt collector. She decided to leave the gym after her year-long contract had expired, but then realised she was expected to give a month's notice before her direct debit could be cancelled. Rather than pay €47 to a gym she never intended to use again, she cancelled the direct debit anyway.
After an email exchange with LA Fitness arguing about terms and conditions, she got a mail from ARC debt-collection agency in the UK asking her to contact a named individual. She ignored the mail and last week got a letter from the agency.
"We understand that the above balance remains outstanding. A county court claim can now be prepared against you and can be issued in Northampton County Court. If the matter is passed to our solicitors our client will claim the following," it continued, before itemising a new bill that claims she may have to pay an outstanding balance of £496, £55 in court fees, £70 in solicitors' fees and £39.31 in annual interest, a total of about £660 (€800).
We contacted LA Fitness. In response, the company claimed the letters she got from its debt-collection agency “were incorrect and should not have been issued”. It put them down to human error and said “sorry for the stress this may have caused”.
It pointed out the “clear condition on our contracts that when cancelling we must have a full calendar month’s notice” and said if “payments owed to us are not collected for whatever reason, ie the direct debit is cancelled before the final due amount is taken – then we will attempt to resolve the matter directly. If a cancellation is made before the correct terms and conditions are fulfilled, and despite repeated attempts to resolve the matter directly with a member, we then have to resort to calling in our debt agency.”
There are thousands of cases documented online of former members of the UK branches of the gym receiving letters from the same debt-collection agency.
We asked LA Fitness why a company acting on its behalf had sent a former member a semi-legal letter threatening her with court in a different jurisdiction and financial penalties because she did not give notice to the gym. We also asked if any other Irish residents had received such correspondence from LA Fitness or a company acting on its behalf? And does the company ever suggest to customers that they might face legal actions and substantial costs if they do not comply with the terms and conditions?
A spokeswoman said that if the company cannot get payment, it routinely involves the debt-collection agency. “They will then send a number of letters to try and get the matter sorted. We have never had to go to court for any outstanding payment issues. However, what we do say is read the terms and conditions carefully.”
“A lot of companies are now taking this hardline approach and I am amazed at the level of aggression,” says Jewell. “I am not saying people should walk away from debts, but these tactics seem entirely unnecessary and counterproductive.”