09-238AD Citigroup responds to ASIC concerns about telephone sales
Tuesday 1 December 2009
ASIC has raised concerns with Citigroup Pty Ltd (‘Citigroup’) that some telephone sales of consumer credit insurance products between August 2008 and January 2009 may have been misleading, or likely to mislead consumers.
Citigroup has been fully cooperating with ASIC and is taking a number of steps to address ASIC’s concerns.
It came to ASIC’s attention that Citigroup received complaints from customers about the sale and promotion of its consumer credit insurance products known as ‘CreditShield’ and ‘CreditShield Plus’ (together known as ‘Creditshield’). Citigroup was selling Creditshield during calls placed by cardholders to activate new or replacement credit cards (‘activation calls’).
Of the total complaints Citigroup received, 174 cardholders complained about selling practices. In addition, a large number of cardholders cancelled their Creditshield policies during this period.
ASIC reviewed randomly selected recordings of direct marketing calls selected from Citigroup’s complaints register.
ASIC’s review of the activation calls revealed the following issues:
- The sale of Creditshield to cardholders who had not agreed to purchase it, including where:
- they had clearly refused to purchase Creditshield;
- they had only agreed to receiving more information about Creditshield in the mail; and
- they incorrectly believed that they were not committing to purchasing Creditshield during the activation call and that the purpose of the cooling off period was to consider whether or not to purchase the product.
- The use of potentially misleading or ambiguous phrases by Citigroup during the activation calls, including:
- the use of the word ‘activate’ when referring to the purchase of Creditshield and not the credit card activation; and
- statements about the cost of Creditshield, including statements such as ‘Creditshield is free if you pay your bills’, which appear to have caused cardholders to wrongly believe that Creditshield premiums would not be deducted if they repaid their credit card balance in full each month.
- Telephone operators persisting with selling Creditshield to callers, despite the cardholder saying ‘No’ more than once – on some occasions in calls reviewed by ASIC, the cardholder said ‘No’ on three or more occasions.
- The practice of telephone operators to keep cardholders ‘captive’ on the telephone call by waiting to tell cardholders that their credit cards had been activated only after Creditshield sales (or attempted sales) had been completed.
Prior to ASIC raising its concerns with Citigroup, Citigroup had already acted to terminate some telephone sales agents.
In order to address ASIC’s concerns and resolve the issues identified, Citigroup has implemented a number of changes to the calling script for its telephone operators.
Some of the changes include the following:
- The initial purpose of the call (the card activation) is concluded before cardholders are asked if they wish to hear about another product (such as Creditshield);
- Words such as ‘enrol’ and ‘activate’ have been replaced by ‘purchase’ when operators are referring to Creditshield;
- The provision of a general advice warning at the commencement of the call;
- The removal of representations regarding Creditshield being ‘free if you have paid your bills’; and
- The introduction of a clear approach to handling customer objections during Creditshield telephone sales.
Citigroup is also now in the process of writing to all customers (other than those that have already made a claim on their policies) who purchased Creditshield while activating their card between August 2008 and January 2009 to ensure that they are aware that they purchased Creditshield, and that they are aware of Creditshield’s terms and conditions.
Customers who believe they were not made aware of their purchase of Creditshield or its terms and conditions are being asked to contact Citigroup on 1300 142 680 in order for Citigroup to promptly address and resolve customers’ concerns including potentially refunding affected customers in the appropriate circumstances.
ASIC acknowledges the cooperative and constructive approach taken by Citigroup in responding to ASIC’s concerns and is satisfied with the steps being taken by Citigroup to address them.
ASIC Website: Printed 02/14/2012
