DennisBeaverAugust 23, 2010 (Original publish date) • By Dennis Beaver

Last week we told you about the months-long credit card billing nightmare in which Eiji Yamashita of Hanford found himself over a computer he ordered online from Toshiba Direct in November 2009, but which was never delivered.

At that time, Toshiba Direct was running an extremely interesting promotion: “Qualify for one of our credit cards, and you can fully customize your computer, with no payments, or interest charges for six months.” Yamashita applied for the card, was instantly approved and ordered a Satellite laptop.

To the award-winning Sentinel reporter, this just seemed to be an online version of what often happens when we are out shopping and are offered a big discount on any purchases made “today in the store,” if we sign up for the store’s credit card.

These store-branded cards are called “private label credit cards,” but come with risks that few users understand. More on that, in a moment.

A parallel universe

Any fan of “The Twilight Zone,” “Outer Limits,” “Star Trek,” “Sliders” or science fiction in general, knows about the so-called “parallel universe,” where there’s another Earth – perhaps another you and me. Should the two worlds come into contact, strange things happen. After exhaustive research, “You and the Law” has conclusively and scientifically determined that Toshiba and UPS have offices in that “other” world, and here’s the proof:

Yamashita’s computer – manufactured in China – was scheduled for UPS delivery on Dec. 1, 2009. He tracked the package; it was listed as being “on schedule.” While nothing was ever delivered to his home on Dec. 1, 2009, UPS records reported a Toshiba package “left at front door.”

“But that computer never made it onboard the UPS plane, never arrived in the USA and was not delivered on Dec. 1, 2009,” I was told by Paul Vollenweider, a VP with Toshiba Direct, in early May of this year.

“It might not have even been manufactured as of that time, from what we can see. This is the strangest thing; no computer, yet it is tracked all through the system. It’s plain weird.” (Mr. Spock agreed, “It was weird!”)

Vollenweider proved himself to be one of the nicest and most helpful upper management level people I’ve spoken with in a long time. Talk about taking “ownership” of a problem! In less than 24 hours after I first spoke with him, Yamashita’s Toshiba credit card account was completely cleared.

But Toshiba Direct and their own credit card billing department repeatedly assured him that a credit card was issued, as it was assumed the computer was stolen from his front porch. So why was he getting billed monthly for a computer never received?

Private label credit cards come with big risks

With the typical credit card – such as Discover, Mastercard, Visa or American Express – when you need to dispute a charge, one phone call puts you in touch with the right people at the financial institution itself. It’s different with most “private label” cards. There’s an additional player – a bank or credit organization behind the card. So if a credit card is sent out – as in our case, by Toshiba – it has to reach the company who issued the card, and apply it to the account.

That’s where it all broke down.

Paraphrasing what Toshiba’s Vollenweider told me, “We had a computer glitch, a bug which meant that credits issued by Toshiba Direct were not being processed by Toronto Dominion Credit Services. Your reader’s situation brought this to our attention and has been resolved.”

How many others are in the same trap?

We wanted to know what steps Toshiba was taking to uncover how many other customers have been trapped in the same situation because of the bug. A huge bank like Toronto Dominion, and a world-class electronics company, shouldn’t just dismiss what happened by saying, “Gee. Sorry, it’s just a bug.” But they have.

More importantly, as Yamashita asked, “Have any customers actually paid these bills, out of fear of being sent to collections and having their credit damaged? Does Toshiba or Toronto Dominion know?”

I repeatedly asked to talk with someone who would address those questions and, months later, am still waiting for a return call. At times, silence screams.

Final thoughts

Store-branded (private label) credit cards are generally easier to obtain than regular cards, such as Visa, as credit standards are much lower. Interest rates charged tend to be significantly higher as well. And financial advisers almost universally advise against them, as they lower your credit score.

And that’s something the nice clerk won’t tell you at the checkout line.

Dennis Beaver practices law in Bakersfield and enjoys hearing from his readers. Contact Dennis Beaver.