Local stores acting as loan sharks under investigation
by Hazal Ateş
ANKARAMay 17, 2015 - 12:00 am GMT+3
by Hazal Ateş
May 17, 2015 12:00 am
After corruption was discovered in jewelry stores and fuel oil stations, some local stores and businesses have been discovered acting as loan sharks. An investigation was initiated upon claims that consumers who are having trouble paying their credit card debts apply to stores that act as loan sharks through a system called "store finance." Customers utilize this method when their credit card limit is full. The business then closes the total debt of the customer and afterwards charges the credit card in installments adding up to the total debt. This way, the store takes a commission from the credit card, and the credit card holder pays around 8 to 10 percent interest to the related business. The stores then receive 10 percent interest in exchange for closing the credit card debts of the consumers, and the stores pay the credit card debt in installments even though the consumers make no additional purchases from the markets.
During the audits, it was determined that such markets create false transactions and turn off point-of-sale (POS) devices. Moreover, it is suspected that about TL 2 billion ($776.16 million) is currently circulating through this system. Customs and Trade Minister Nurettin Canikli said banks or other financial institutions discovering such false transactions through POS devices, cash cards or credit cards should disable the use of physical or virtual POS devices they have provided to such businesses within seven days upon being informed of such activity. He also stressed they should terminate the contract, if any, by submitting a contract termination notice. Currently, legal proceedings are being brought against stores that are trying to make profits out of customers' desperation.
Canikli said banks would not be allowed to make any agreements for a year with businesses that perform such transactions. Furthermore, if such actions are repeated within the next five years, then no agreements will be made with the business in question for the next three years. The minister emphasized the Turkish Banking Association's public announcement to ensure the appropriate use of POS devices, to support the legal economy and to prevent credit card holders from suffering. To prevent the illegal and improper use of POS devices and credit cards, the Professional Classification Recommendation came into force on Jan. 1 against such businesses. Accordingly, POS devices of any business that closes and receives the credit card debts of customers in installments will be disabled within a week, and contracts with the related bank will be terminated.
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