Best Buy’s Late Fee Gotcha

November 20, 2009

By Angie Moreschi:

Consumers, brace yourself.  We’ve uncovered yet another way customers are getting zapped by using a credit card.  This time, giant electronics retailer Best Buy engages in some tricky billing that slaps a customer with a late fee for paying early.  It may sound crazy, but just click here to learn more and watch the story above.

Paying Early is Too Late

In the wacky world of business gotchas… this is a new one.  Pay your bill early—get slapped with a late fee.

Florida resident Ron Jordan paid his Best Buy bill for an installment plan on a new TV on the first of the month.  So, when he got his statement, he was puzzled to see a late fee listed.  “When I got my latest Best Buy Bill, I’m looking on it and it shows a $39 late charge assessment and I’m thinking– there’s no way. I always pay my bills on time,” said Jordan.

It didn’t make sense.

Jordan has been a loyal Best Buy customer for years, buying computers, TVs and even a washer and dryer.  He never had a problem, until now. To his shock, when he looked back at the previous month’s bill, the same thing happened. “I paid September on September  one, but they’re showing I have a late charge on the 24th. I said that can’t be,” Jordan explained in disbelief.

The late charge was even more than his minimum payment, which really irritated this retired FBI agent and certified fraud examiner. Jordan called Best Buy Customer Service to complain.

“All of a sudden, the lady says, ‘Well, you paid too soon.’ I said, ‘What do you mean I paid too soon?’ She said, ‘What happens is if you pay by the first of the month, then it goes back into the previous month. It’s like a double payment for that month.'”

The customer service rep’s explanation prompted this response from Jordan: “I said, ‘That’s got to be illegal.'”

“I cannot understand how they can say if you paid it on the first, it really belongs in the previous month.  That just doesn’t make any sense at all to me,” he added.

Tricky Accounting

After haggling with her and asking to speak to a supervisor, the customer service rep finally agreed to remove the late charges, but Jordan worries other customers might not be as lucky in getting their accounts credited.  And he appears to be right.  A quick check on the internet turned up similar late fee complaints from other Best Buy customers.

Best Buy doesn’t actually run the credit card program itself.  It contracts with HSBC (Household Bank) to do it. Having a bank involved gave Jordan little comfort.

The whole mess has left him wondering about what exactly the company was up to.  “I’m a qualified expert in white collar crime, and when you see something like this, you say,’ Hmm mmm.’ You know, this can’t be true.”  It left him asking this question: “Did the bank set this up so they could intentionally get these extra $39/month late fees?”

It sure sounds like some pretty funky accounting. Jordan’s bill clearly states there’s a 30 or 31 day billing cycle, and he paid within in that time period.  So, what gives?  Why would Best Buy penalize a good customer for trying to pay on time?

Best Buy Response

We contacted Best Buy to get their response. Senior Executive Resolution Specialist Jill Nezworski got back to me right away.  Unfortunately, she didn’t a have a lot of answers.

She acknowledged Mr. Jordan “has a point as a consumer” and said Best Buy “does not want to make it confusing for customers to pay their bills.” But then came the big excuse.  It’s not Best Buy, she said, but HSBC (Household Bank) that runs the credit card program, and she’d have to get them to look into it.

To make a long story short, we went back and forth, and I was assured she would be able to explain more after talking with HSBC. Surprise. Surprise. That all changed when she talked with HSBC.  They forwarded this statement from HSBC’s VP of Public Affairs Kate Durham:

“In order to protect our customers’ privacy, HSBC does not discuss individual account matters. We are committed to ensuring that all of our customers receive a positive card experience with each and every interaction.”

Well, what a disappointment.  Jill was so nice, but all I got in the end was essentially a big, old “no comment.” It’s pretty clear this doesn’t have anything to do with Mr. Jordan’s privacy. It has to do with a questionable policy that punishes good customers for paying on time, while bringing in extra cash for the company coffers.  Best Buy should stop running for cover and stand up to explain what appears to be an unfair policy.

Getting no explanation is really a shame since they claim to want customers to have a positive experience and all. I talked to Mr. Jordan again, and he’s not feeling very positive right now. “Well, they didn’t satisfy me at all,” he says.