Interest-ing: Eddie Bauer bill triples

If you apply for an Eddie Bauer credit card today, you'll see no mention of First Consumers National Bank, or FCNB, on the application. Unfortunately, Merry Hanson wasn't so lucky when she got her Eddie Bauer card three years ago– and the difference, as she's come to learn, was no small deal.

In early April, when Hanson tried to charge a purchase at the chain's store at Fashion Square, she was told she would have to apply for a new card. Hanson was "puzzled," as she later explained via email, because she hadn't gotten a bill "in some time," and didn't understand how there could be a problem with her account. In any case, she applied for and got a new card, and "all seemed fine."

"Then out of the blue," she continues, "I got a notice from a collection agency billing me for $352.98. I had no idea what this referred to or where the expense came from." She called the collection agency and learned, to her surprise, that she "was in arrears to Eddie Bauer, and the account had been turned over to this company"– GC Services of Houston– "for collection." The original amount, $108.02, had more than tripled, due to interest and penalties.

Hanson claims she told the GC Services employee that she "hadn't received any bills" from Eddie Bauer and that she "certainly would have paid" them if she had. "He said, in a word, 'tough.' He said a company doesn't have to bill a customer [and] the customer still has to make a payment."

By Hanson's account, when she protested the extra charges, the employee "agreed to reduce the amount to $264.74," but when she said she intended to call Eddie Bauer, he said she "couldn't call them, [and that] it wasn't legal" for Eddie Bauer to discuss her account.

Hanson mailed GC Services a check for $108.02– but she also called Eddie Bauer, where she got a lesson in corporate history. Turns out Eddie Bauer is owned by the Spiegel Group, which declared Chapter 11 bankruptcy in March 2003. The Spiegel Group also owns FCNB, which serviced the credit cards issued by Eddie Bauer, Newport News (a women's clothing retailer), and Spiegel's catalog sales. As part of the Spiegel Group's restructuring, it liquidated FCNB and sold its accounts receivable. GC Services entered the picture when the accounts-receivable purchaser hired it to collect debts from Eddie Bauer card holders.

I spoke with Elizabeth Borrelli, director of corporate affairs and social responsibility for Eddie Bauer, who looked into Hanson's situation and reported that according to GC Services, Hanson had moved in October 2002 without leaving a forwarding order. Her last statement, they claimed, had been returned to Eddie Bauer/FCNB, where it had accrued interest and penalties until GC Services tracked her down last month.

Hanson vigorously disputes this, saying that although she did indeed move from Charlottesville to Gordonsville in 2002, other mail– bank statements, credit card bills, etc.– followed her. "I've never moved without a forwarding address," she states. "We never missed any of our mail."

Borrelli had good news: Hanson's account now has a zero balance, so apparently the interest and penalties have been waived. When I called GC Services general manager Mark Caruso, he refused to comment and referred me to the company's attorney, Joseph Van Nest. Hanson was also referred to Van Nest, and claims that when she asked to see proof that the original bill had been returned to FCNB as undeliverable, Van Nest replied that her documents had been returned to the account's owners, CMS, that morning. I later asked Van Nest who "CMS" is, but he refused to say.

The Spiegel Group announced last month that it hopes to lighten its load further by selling Eddie Bauer. And Borrelli, via email, asked me to assure readers that "while our reorganization has been challenging, we remain committed to moving our business forward and providing excellent customer service and product."

Do you have a consumer problem or question? Email the Fearless Consumer or write her at Box 4553, Charlottesville 22905.