PowerHouse is a high street retailer offering anything from washing machines to home entertainment systems. It has stores nationwide and claims to sell top brands at incredible prices. Lately however, it hasn't been doing so well. It recently came third from bottom in a Which? Magazine report of the UK's worst retailers and since 2003 we've received over 1,000 complaints about them.
When around 30 of its stores closed in February 2006, it left customers stranded without their goods and staff without their jobs. We were contacted by a number of ex-employees keen to speak out about the sales practices of PowerHouse. They gave us an insight into how this company is run and why it's notorious for unhappy customers.
Keith Murray, former director of the Liverpool branch, told us the company's money-making secrets: warranties and loans. He said 'we don't make money from selling boxes' the real profit comes from getting customers to sign up to loan agreements, buy now pay later deals and extended warranties. These can leave a customer paying hundreds of pounds in interest. Furthermore, staff are incentivised to sell these products, getting higher commissions if they do.
Watchdog decided to send a team of undercover researchers into a number of PowerHouse stores across the country to see what they would tell us. Some stores were worse than others, but we did find ourselves being regularly bamboozled with extra guarantees, buy now pay later schemes and personal loans which would have ended up costing us hundreds of pounds extra. One salesman tried to sell us a finance deal 15 times even though we made it clear we could pay in cash right there and then.
What's more, some viewers wrote to us complaining that the warranties which they had spent hundreds of pounds on weren't as good value as thought, with some customers waiting weeks for repairs and replacements on their faulty goods, while others were told that they'd already claimed too many times - even though there was supposed to be no limit.
PowerHouse says it does recommend warranties as a cost-effective solution if products break down and that it is in line with other retailers in doing this. It denies that its staff pressurise customers with only 35 per cent taking out credit agreements and 10 per cent of customers taking out warranties. It says their commissions' structure is similar to other companies and it'll be contacting two of the customers featured in tonight's programme. The third customer relates to an era before the current owners of the company took over.
(Source - bbc.co.uk/watchdog)