A This is Money reader who has been a Virgin Money credit card holder for five years has accused it of ‘purposely misleading people for financial gain’ after it refused to refund interest charges he incurred on his account.
Samuel Shepherd, 31, from Tower Hamlets, had to reapply for a Virgin Atlantic credit card last October. This was due to Virgin Money taking over the credit cards from MBNA.
He was subsequently put on the default option of a direct debit paying off the minimum amount each month – when previously, he had it set up to pay the full balance.
As a result, he ended up having to pay £200 in interest on balances he didn’t realise were not being cleared each month.
This is Money has published several stories featuring those who had incurred charges after signing up for new Virgin Atlantic credit cards since last year. Many are longstanding Virgin customers like Sam – who has held one for 5 years
This is Money reported earlier this year on how numerous longstanding Virgin Atlantic cardholders were caught out by only setting up minimum payment direct debits last summer, many of whom were ex-Virgin Money employees.
They had to reapply when the provider of the card changed, and despite the fact many had held Virgin Atlantic cards for a long time and always borrowed responsibly they were only given the option to set up a direct debit by paying off the minimum balance each month.
Those who spoke to This is Money described the fact Virgin had set up the payment system this way as ‘shocking’ and ‘not classy or in keeping with the Virgin ethos’.
While Virgin initially insisted that it made it clear to customers they would subsequently have to change how much they were paying after signing up, it later u-turned and agreed to refund any charges incurred by customers who signed up before August 9.
Mr Shepherd applied for his new card two months after this cut-off.
Virgin said the reason for the cut-off, and thus the reason why they have refused to reimburse Mr Shepherd, is because anyone who opened an account after that date would have received an email and a text message after 20 days reminding them to change their payment settings.
Virgin Atlantic’s basic Reward credit card has an APR of 22.9 per cent, while its Reward+ card comes with a hefty APR of 63.9 per cent.
The cards give holders Virgin Flying Club miles when they spend money, which can be exchanged for Virgin Atlantic flights.
Sam Shepherd wrote to Virgin Money chief executive David Duffy in June, accusing the bank of ‘purposely misleading people for financial gain’
It appears that those who signed up after this date are unlikely to be successful if they ask Virgin Money to refund them.
Mr Shepherd, who works as a designer for Marks & Spencer, claims he didn’t receive an email, and even though he received a text message on 6 November ‘still had the same application process as the customer that were refunded’.
He added: ‘It is extremely odd that they would not include the “pay balance in full” as an option.
‘It is without question misleading and in my opinion done purposely to work in their favour.
‘I just feel that they have wrongly misled their customers and abused their position of power.’
In December, Virgin Money further updated its application process so those who signed up were given the option to pay their balance off in full when they initially applied.
In response to a letter Mr Shepherd wrote to Virgin Money chief executive David Duffy, it defended the fact that longstanding Virgin Atlantic cardholders had to re-apply and set up new direct debits.
It said: ‘Virgin Money did not acquire the account portfolio from MBNA, we held no information about existing credit card customers or their account usage and payment settings.
‘Also, we were unable to migrate any customers to our systems, so in order to obtain a new Virgin Atlantic credit card, customers were required to make a new application.’
In response, Virgin told Sam that the wording on its application form ‘was clear’ and that customers should’ve been aware they needed to change their direct debit after signing up
A Virgin Money spokesperson added: ‘We’re confident the application process for Virgin Money’s new Virgin Atlantic credit card is really clear and transparent and clearly sets out the direct debit process for customers.
‘We put in place additional reminders for customers to remind them of their direct debit options and how to change them if they wanted to in August last year.
‘As this customer applied for their card after these changes were made, we do not believe a refund is appropriate, a decision which has been supported by the Financial Ombudsman Service.’