Fashion orientation, credit card use, and
compulsive buying
Hye-Jung Park
Korea Polytechnic University, Kyonggi-Do, South Korea, and
Leslie Davis Burns
Oregon State University, Corvallis, Oregon, USA
Abstract
Purpose – As an effort to identify the underlying determinants of compulsive buying, this study seeks to examine fashion orientation, a fashion-related
variable, as a direct antecedent of compulsive buying and as an indirect antecedent of compulsive buying through credit card use.
Design/methodology/approach – Using a convenient sampling method, women aged over 20 years living in the Seoul metropolitan area were
selected as the sample. Out of 380 distributed, 267 useful questionnaires were returned. Confirmatory factor analysis and path analysis were conducted
using structural equation modeling.
Findings – The results of this study showed that fashion interest significantly influenced compulsive buying directly and also indirectly by influencing
credit card use.
Originality/value – This study has significance in terms of being the first one to explore the relationship between fashion orientation variables and
compulsive buying, offering a new perspective on compulsive buying.
Keywords Fashion, Credit cards, Buying behaviour, South Korea
Paper type Research paper
variables adopted by most research on compulsive buying
(d’Atous et al., 1990; DeSarbo and Edwards, 1996; Kwak
et al., 2002; Mowen and Spears, 1999; Rindfleisch et al.,
1997; Roberts, 1998; Valence et al., 1988) tend to be
restricted to marketing variables related to mass media
(advertising contents, TV viewing), socio-environmental
variables related to family and peer influences, and personal
characteristics variables related to personal traits and
demographics. This leaves much room for considering more
diverse variables like fashion-related variables to better
understand the underlying determinants of compulsive
buying. Searching for the determinants for Korean TV
home shoppers’ compulsive buying, Park (2003) found credit
card usage to be the most influential factor followed by
expenditure on fashion goods. Park also found that TV home
shoppers who purchased fashion goods showed a higher
degree of compulsive buying than those who purchased nonfashion goods. Based on these findings, Park raised the need
for further research encompassing various fashion-related
variables to better understand compulsive buying and to
clarify those variables’ relationships with credit card use.
The purpose of this study was to identify the direct impact
of fashion-related factors on compulsive buying and the
indirect impact of fashion-related factors on compulsive
buying through credit card use. This study proposed a model
to better understand compulsive buying. Based on the study
of Krugger (1998) that compulsive buyers are likely to be very
conscious of how they look and appear to others and to be
engaged in an unceasing pursuit of things, especially clothing,
this study examined the variable, fashion orientation, which
relates to an individual’s concern about the perception of
other people toward his or her clothing. The causal path of
the model is that fashion orientation may influence
compulsive buying both directly and indirectly.
Introduction
The Korean consumer market has been changing rapidly as
its doors open to the global economy. Seeing profit
opportunities, more transnational companies are entering
the Korean market implementing their global marketing
strategies resulting in globalization of consumption in Korea.
As Solomon (2004) pointed out that transnational companies
create a consumption ethic that encourages people of the
world to embrace western-style material lifestyles, these global
marketers have been successful in convincing an increasing
number of Korean consumers that consumption is
economically desirable. This is contrary to the traditional
Korean perspective discouraging consumption. The diffusion
of this new consumption ethic has significantly affected
buying behaviors of many Koreans, some of whom are even
displaying an extreme buying behavior called compulsive
buying.
Considered as a side effect of materialism and the dark side
of consumer behavior, compulsive buying has been under
scrutiny by numerous consumer researchers as well as
marketers because of its serious impact on the individual
and the public. Though elaborate efforts have been made on
identifying determinants of compulsive buying, the variables
used in preceding research have been selectively limited. The
The Emerald Research Register for this journal is available at
www.emeraldinsight.com/researchregister
The current issue and full text archive of this journal is available at
www.emeraldinsight.com/0736-3761.htm
Journal of Consumer Marketing
22/3 (2005) 135– 141
q Emerald Group Publishing Limited [ISSN 0736-3761]
[DOI 10.1108/07363760510595959]
135
Fashion orientation, credit card use, and compulsive buying
Journal of Consumer Marketing
Hye-Jung Park and Leslie Davis Burns
Volume 22 · Number 3 · 2005 · 135 –141
Understanding compulsive buying with consideration on
fashion orientation provides marketers and government policy
makers with insights about predicting and preventing
consumers’ extreme buying behaviors.
impulsively driven to consume (Faber et al., 1987). The other
forms of compulsive consumption are addictive gambling,
drug addiction, alcoholism, and overeating (Shiffman and
Kanuk, 2000). Like the aforementioned behaviors,
compulsive buying deteriorates not only the well-being of
individuals themselves but also that of their families, and even
that of the society they belong to because of the severe
financial, emotional and interpersonal consequences it
arouses.
As more attention was paid to compulsive buying, research
has been conducted to measure and identify compulsive
buying. Faber and O’Guinn (1992) and Valence et al. (1988)
developed scales to measure compulsive buying. Cole and
Sherrell (1995) found that the Faber and O’Guinn scale
identifies more extreme compulsive buyers, whereas the
Valence et al. scale measures a group of respondents’
compulsive buying tendencies. Rindfleisch et al. (1997)
identified the influence of family structure and materialism
on adolescents’ compulsive buying. d’Atous et al. (1990) also
found that teenagers’ compulsive buying tendencies are
influenced by environmental factors such as peers, family’s
communication, and parents’ compulsiveness. Employing a
phenomenological approach using both quantitative and
qualitative data, O’Guinn and Faber (1989) found that
compulsive buyers are likely to demonstrate compulsivity as a
personality trait and have lower self-esteem and fantasies and
consequences of compulsive buying were extreme levels of
debt, anxiety and frustration, subjective sense of loss of
control, and domestic dissension.
Theoretical background
Fashion orientation
In identifying clothing-fashion life style segment, Gutman and
Mills (1982) developed fashion orientation factor composed
of four dimensions:
(1) Fashion leadership.
(2) Fashion interest.
(3) Importance of being well dressed.
(4) Anti-fashion attitude.
Using Korean subjects, Chung (1996) and Lee et al. (2004)
identified the same four dimensions of fashion orientation.
Sharing the common ground with Gutman and Mills
(1982), Huddleston et al. (1993) used fashion orientation to
identify lifestyle characteristics that are directly related to
shopping behavior and Lumpkin (1985) included it as a
variable in identifying shopping orientation segment. In
addition, Darley and Johnson (1993) found that American
female adolescents’ shopping behaviors were influenced by
fashion orientation. Following the aforementioned preceding
studies, this study examined fashion orientation in
relationship to compulsive buying.
Credit card use
The dramatic increase of credit card use in recent years by
Korean consumers has accelerated transforming Korea into a
mass consumption society. Due to Korean credit card
companies’ aggressive market expansion and promotion
strategies together with the convenience of using credit card,
increasing number of consumers tend to use credit card
beyond their paying ability. With over 100 million credit cards
issued to the public around the end of 2002 (Kim, 2002),
consumer bankruptcies have erupted in recent years and there
are grave concerns that the number will significantly increase
as credit card debts mount up and distress more consumers
financially. However, despite the tremendous impact of credit
card use on individual consumers, businesses and the society,
little research has been done on it to date. Feinberg (1986),
Pinto and Parente (2000), and Till and Hand (2003) are
some of the many researches in the western society who have
identified the determinants of consumers’ credit card usage.
Hypothesis development
Several studies (d’Atous, 1990; Feinberg, 1986; Magee, 1994;
O’Guinn and Faber, 1989; Roberts, 1998; Roberts and Jones,
2001) identified a significant relationship between credit card
use and compulsive buying. Using Korean subjects, Park
(2003) found that credit card use was the most influential
factor followed by expenditure on fashion goods to TV home
shopper’s compulsive buying. Based on the finding, Park
suggested that fashion-related variables other than
expenditure on fashion goods should be considered to have
a better understanding of compulsive buying. Accordingly,
this study adopted fashion orientation, a fashion-related
variable, as a direct antecedent of compulsive buying and as
an indirect antecedent of compulsive buying through credit
card use. Figure 1 shows the path model based on the
hypothesized relationships among these variables in this study.
Compulsive buyers can temporarily escape negative feelings
through fantasizing about personal success and social
acceptance while engaging in the particular behavior
(Jacobs, 1986). Elliot (1994) found that one of the primary
functions of compulsive buying is to increase the compulsive
buyer’s ability to match his or her subjective perceptions of
socially desirable or required appearance. Roberts and
Martinez (1997) also found compulsive buying to be
positively related to buying goods showing social status both
in the US and Mexico. Since clothing is regarded as one of the
manifest examples of status consumption, it may be
reasonable to assume that highly fashion oriented
consumers are likely to do compulsive buying. Studies by
Krugger (1998) and Schlosser et al. (1994) support this
assumption. Krueger found that compulsive buyers are likely
to be very conscious of how they look and appear to others
Compulsive buying
According to O’Guinn and Faber (1989), compulsive buying
is chronic, repetitive purchasing that becomes a primary
response to negative events or feelings. Compulsive buyers
tend to buy excessive number of objects they do not need and
they sometimes cannot afford (Hoyer and MacInnis, 2001).
Compulsive buying is different from impulse buying: impulse
buying centers on a specific product at a particular moment
and it is temporary, while compulsive buying is an enduring
behavior that centers on the process of buying, not the
purchases themselves (Solomon, 2004).
Compulsive buying is one form of compulsive consumption
that is in the realm of abnormal consumer behavior regarded
as the dark side of consumption (Shiffman and Kanuk, 2000).
Compulsive consumption is inappropriate, typically excessive,
and clearly destructive to the lives of individuals who appear
136
Fashion orientation, credit card use, and compulsive buying
Journal of Consumer Marketing
Hye-Jung Park and Leslie Davis Burns
Volume 22 · Number 3 · 2005 · 135 –141
Figure 1 Model of hypothesized relationship among fashion orientation, credit card use, and compulsive buying
cards than non-compulsive buyers. Applying these findings to
Korean consumers, this study hypothesized the positive
relationship between credit card use and compulsive buying as
follows:
H3. Credit card use promotes compulsive buying.
and to be engaged in an unceasing pursuit of things, especially
clothing, to fill internal emptiness and to make themselves feel
complete. After interviewing 46 compulsive buyers, Schlosser
et al. found that subjects spent their money on clothing, shoes,
and records/compact discs. As consumers who have fashion
leadership and interest and know the importance of being well
dressed are more likely to be compulsive buyers, whereas
those who have anti-fashion attitude are least likely to be
compulsive buyers, this study establishes the following
hypothesis.
H1. Among the factors of fashion orientation, three factors
– fashion leadership, fashion interest, and importance
of being well dressed – spur compulsive buying, while
anti-fashion attitude does not encourage compulsive
buying.
Method
Measurement
The questionnaire for this study contained multi-item
measures of fashion orientation, credit card use, and
compulsive buying. Fashion orientation was measured using
Gutman and Mills (1982) fashion orientation scale, with its
four factors of fashion leadership, fashion interest, importance
of being well-dressed, and anti-fashion attitude. The
measurement of fashion leadership was composed of five
items such as “it is important for me to be a fashion leader”.
The measurement of fashion interest was composed of five
items such as “I spend a lot of time on fashion-related
activities”. The measurement of importance of being well
dressed was composed of four items such as “it is important
to be well-dressed”. The measurement of anti-fashion attitude
was composed of three items such as “fashion in clothing is
just a way to get more money from the consumer”. For the
anti-fashion factor, two additional items, “I only buy the
clothing I really need” and “when buying clothing, I seriously
consider its utility value compared to its price”, were included
modifying what were used in the previous studies (Chung,
1996; Park, 2003) using Korean subjects. Credit card use was
measured using the scale developed by Roberts and Jones
(2001), which was composed of 12 items such as “my credit
cards are usually at their maximum credit limit”. The scale
was used in a Korean marketing literature (Park, 2003) and
proved its reliability. The compulsive buying scale developed
by Faber and O’Guinn (1992) was used to measure
compulsive buying and was composed of seven items such
as “I have bought things though I couldn’t afford them”. The
scale was applied to Korean subjects by Lyi et al. (1997) and
Kwak et al. (2002) and showed its reliability. All measures
used five-point Likert-type scales, which ranged from strongly
disagree (þ 1) to strongly agree (þ5).
According to Richins (1994), materialists are more likely to
value possessions for their status and appearance. As pursuing
fashion is important to people living materialistic lifestyles,
fashion orientation itself maybe considered as materialistic.
Considering that clothing is one of the best means to show off
status and appearance as noted in the first hypothesis, it may
be reasonable to assume there is a strong relationship between
fashion orientation and materialism. This assumption
together with the finding that there is a strong relationship
between materialism and credit card use by Rindfleisch et al.
(1997), it is hypothesized that fashion orientated consumers
to be heavy credit card users. Consumers who tend to have
fashion leadership and interests and know the importance of
being well dressed might use their credit cards more often to
“buy now and pay later” for clothing they might not be able to
afford to buy without credit cards, while those who have antifashion attitude are least likely to use their credit cards to buy
clothing they can not afford. The second hypothesis is as
follows.
H2. Among the factors of fashion orientation, three factors
– fashion leadership, fashion interest, and importance
of being well dressed – spur credit card use, while antifashion attitude does not promote credit card use.
The relationship between credit card use and compulsive
buying seems to be clear considering the rapid increase of
both credit card use and compulsive buying in recent years.
Most researches show that credit card use is a critical factor to
compulsive buying. Feinberg (1986) found credit cards as
spending-facilitating stimuli. Roberts (1998) and Roberts and
Jones (2001) found a strong relationship between credit card
use and compulsive buying among American college students.
D’Atous (1990) and Magee (1994) also found that
compulsive buyers to be more likely to use credit cards
more. Consistent with these researches, O’Guinn and Faber
(1989) identified that compulsive buyers had more credit
Data collection and analysis
The data of this study was collected through surveying
women only because Faber et al. (1987) and O’Guinn and
Faber (1989) found women to be more compulsive than male
and they tended to spend more on clothing.
Using convenient sampling method, women over 20 years
of age living in the Seoul metropolitan area were selected as
sample. Out of 380 distributed, 267 useful questionnaires
137
Fashion orientation, credit card use, and compulsive buying
Journal of Consumer Marketing
Hye-Jung Park and Leslie Davis Burns
Volume 22 · Number 3 · 2005 · 135 –141
were returned. Descriptive statistics for demographic
characteristics of the respondents are shown in Table I. The
mean scores of credit card use and compulsive buying are
17.45 (SD ¼ 5.39) and 14.97 (SD ¼ 5.68), respectively.
Amos 4.0 program was used for all structural modeling
analysis using maximum likelihood estimation. The fit of the
structural model was evaluated by examining Chi-square
statistics, goodness-of fit index (GFI), adjusted goodness-offit index (AGFI), normed fit index (NFI), and Tucker-Lewis
index (TLI). This study also examined comparative fit index
(CFI) because CFI is robust to sample size while other
indexes are not (Bentler, 1990). This study used an alpha
level of 0.001 for all statistical tests.
buying, all fit measures except chi-square (x2) statistics were
also quite acceptable. Though it was at minimal level, fit
measures for the credit card use scale were also acceptable.
Therefore, it was concluded that all the scale fit measures
were acceptable for testing the model fit. In addition,
Cronbach’s alphas for scales in the model ranged from
0.8033 to 0.8963, which suggests that the measures for the
scales were reliable.
Test of model
Table III shows the results of model fit. GFI, AGFI, and NFI
values were 0.864, 0.835, and 0.863, respectively, which
indicate a minimally acceptable fit. TLI and CFI in this
model are 0.937 and 0.945, respectively. Thus, it can be
concluded that the model fit is acceptable for testing the
hypothesized relationship.
Results
Scale assessment
Three scales were assessed their measurement properties
using confirmatory factor analysis (CFA). For the fashion
orientation scale, after CFA had been conducted to each of
the four factors – fashion leadership, fashion interest,
importance of being well dressed, and anti-fashion attitude
– one of the anti-fashion attitude items was deleted because of
no significance of its factor loading. For credit card use scale,
six items were also deleted.
Table II shows fit measures for the scales. All the fit
statistics for two scales, importance of being well-dressed and
anti-fashion attitude, were quite acceptable. Regarding the
scales of fashion leadership, fashion interest, and compulsive
Hypothesis test
The hypothesized relationship was tested by path analysis
using structural modeling. Standardized path estimates are
shown in Figure 2. Though fashion orientation factors were
mostly correlated to each other, only the fashion interest
factor spurred compulsive buying (path coefficient¼0.31),
indicating that H1 is partially accepted. Similarly, only the
fashion interest factor raised credit card use (path
coefficient ¼ 0.43), indicating H2 is partially accepted. H3 is
also accepted as credit card use raises compulsive buying
(path coefficient ¼ 0.46). Consequently, the results of this
study showed that fashion interest not only significantly
influenced compulsive buying directly but also indirectly by
influencing credit card use.
Table I Demographic characteristics of the respondents
Characteristic
Age
Marital status
Education
Occupation
Family income
Number Percent
20-29
30-39
40-49
50-59
60 or above
Never married
Married
Others (divorced, widowed)
College degree and graduate student
High school diploma and college
student
Graduate degree
Not a high school graduate
Housewife
Student
Professional
Wage worker
Self-employed
Stay-at-home
Others
Under US$2,000
2,000-2,999
3,000-3,999
4,000-4,999
5,000-5,999
5,000-6,999
US$7,000 or above
112
67
60
26
4
156
109
4
136
41.6
24.9
22.3
9.7
1.5
57.8
40.4
1.9
50.6
94
28
11
79
68
50
23
19
11
19
40
58
74
27
30
12
23
34.9
10.4
4.1
29.4
25.3
18.6
8.6
7.1
4.1
7.0
15.2
22.0
28.0
10.2
11.4
4.5
8.7
Implications and future studies
As compulsive buying has gained increasing attention from
marketers and researchers all over the world, efforts have been
made to identify the underlying determinants of the behavior
from diverse perspectives. However, no research has been
made to examine whether fashion-specific variables affect
compulsive buying. Consequently, this study has significance
in terms of being the first one to explore the relationship
between fashion orientation variables and compulsive buying
offering new perspective on this extreme buying behavior.
The findings of this study provide a few implications for
researchers, marketers and government policy makers. First,
consumers have easy access to too much credit. As Schor
(1998) pointed out that access to easy credit is one of the
causes of overspending, increasing number of consumers are
suffering from mounting credit card debts resulting from
abusing the credit that came easy. Once realizing that credit
card use is a more or less controllable variable while fashion
interest variable and other variables triggering compulsive
buying are not, the choice is clear for policy makers and
marketers, especially fashion retailers issuing in-store credit
cards. Credit card issuers’ operations should be more tightly
and meticulously regulated by authorities and each issuer’s
internal governance system in terms of new credit issuance,
especially to new and young users, credit monitoring and
management, and promotional activities. Second, the finding
made through this study’s causal modeling that fashion
interest not only directly influenced compulsive buying but
also indirectly by spurring credit card spending suggests that
138
Fashion orientation, credit card use, and compulsive buying
Journal of Consumer Marketing
Hye-Jung Park and Leslie Davis Burns
Volume 22 · Number 3 · 2005 · 135 –141
Table II Fit of the scales
Scale
Fashion orientation
Fashion leadership
Fashion interest
Importance of being well dressed
Anti-fashion attitude
Credit card use
Compulsive buying
x2
p
GFI
AGFI
NFI
TLI
CFI
16.519
27.762
3.809
2.112
105.061
33.914
0.006
0.000
0.149
0.348
0.000
0.002
0.978
0.959
0.993
0.996
0.880
0.963
0.934
0.876
0.965
0.980
0.719
0.925
0.972
0.925
0.989
0.972
0.843
0.970
0.960
0.920
0.983
0.995
0.756
0.973
0.980
0.960
0.994
0.998
0.853
0.982
Figure 2 Path coefficients in hypothesized relationship
Chung, H. (1996), “College women’s clothing shopping
orientation and market behavior”, Journal of Costume
Culture, Vol. 4 No. 2, pp. 111-29.
Cole, L. and Sherrell, D. (1995), “Comparing scales to
measure compulsive buying: an exploration of their
dimensionality”, Advances in Consumer Research, Vol. 22
No. 1, pp. 419-27.
Darley, W. and Johnson, D. (1993), “Effects of female
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d’Atous, A. (1990), “An inquiry into the compulsive side of
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d’Atous, A., Maltais, J. and Roberge, C. (1990), “Compulsive
buying tendencies of adolescent consumers”, Advances in
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DeSarbo, W. and Edwards, E. (1996), “Typologies of
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Elliot, R. (1994), “Addictive consumption: function and
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Table III Fit of the model
x
Model fit
2
638.948
p
GFI
AGFI
NFI
TLI
CFI
0.000
0.864
0.835
0.863
0.937
0.945
researchers should be aware different mixes of variables result
in different degree of correlation.
The following are some suggestions for future studies. First,
as the scope of this study was limited to women in the Seoul
metropolitan area, future researches conducted with more
representative pools reflecting broader demographical
characteristics would add additional credibility to the
findings. In addition, one might like to isolate a
demographic group, such as women in their 20s, and
compare them to a mainstream population. Second, as it
was beyond the scope of this study, it would be interesting to
expand this study cross culturally and compare cultures with
different degrees of economic development. Third, future
researches should also consider other fashion-related variables
and compare the results with those of non-fashion-related
variable to determine if fashion-related variables as a whole
can be considered a major determinant of compulsive buying.
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Executive summary and implications for
managers and executives
This summary has been provided to allow managers and executives
a rapid appreciation of the content of this article. Those with a
particular interest in the topic covered may then read the article in
toto to take advantage of the more comprehensive description of the
research undertaken and its results to get the full benefits of the
material present.
Responsible lending is up to the lender not the regulator
Compulsive buying has become more common in recent
times leading to criticism of our materialistic ways and
especially the activities of marketers as cheerleaders for the
hedonistic, consumer society. Just as we need to understand
other compulsive behavior (gambling, overeating, alcohol and
drug abuse), compulsive buying must be recognized and
appreciated. However, dealing with compulsive behavior is
not a primary concern for marketers but for clinicians in
psychology and psychiatry.
Park and Burns examine the factors that are associated with
compulsive buying and especially fashion-orientation and
credit card usage. As marketers we can appreciate that an
ethical responsibility exists for us to identify compulsive
behavior – just as it is wrong for a barman to continue serving
a drunk, we should avoid indulging the compulsive buyer.
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Fashion orientation, credit card use, and compulsive buying
Journal of Consumer Marketing
Hye-Jung Park and Leslie Davis Burns
Volume 22 · Number 3 · 2005 · 135 –141
Compulsive buying just got easier!
It is not the case that compulsive buying in a new
phenomenon but it is that case that individuals with such a
compulsion have it far more easy. The main reason for this is
the availability of credit – when the buyer had only the money
in her pocket, she could not spend beyond her means so easily
as is the case with unsecured credit.
Periodically, we hear of terrible cases where individuals have
run up huge unsustainable debts – not through misfortune
but through the compulsion to go on buying. We are expected
to feel sorry for such people in a way that would be less the
case had the family’s crisis been precipitated by drugs,
gambling or alcohol. And such reports are often associated
with the cries of politicians for action against the peddlers of
easy credit – the card companies and the retailers.
Marketers involved in the promotion of retail credit need to
take heed of these cries since they too often translate into a
further iteration of sub-optimal regulation that seems not to
prevent compulsion but to penalize the responsible user of
credit. Our common sense duty is to seek not to issue credit to
the compulsive buyer, our problem is how to identify such
people.
The companies have developed specific products for
marketers through using the credit data they hold as
methods of targeting (usually combined with census and
address data). These geodemographic systems have very wide
applications but always faced a limitation since only very
extreme variations from the norm delivered adequate
targeting information – what was missing was lifestyle
information.
The lifestyle data – information about actual purchases and
real consumer behavior – is now readily available in the more
sophisticated marketing environments (and where daft
government regulation does not prevent such data
collection). Using this information alongside traditional
credit data may provide a means to identify potential risks
from compulsive buyers. Rather than relying on the limited
amount of credit information associated with a given
individual, we can begin to develop a risk profile based on
purchase behavior and the collection of lifestyle data by way of
the credit application itself.
At the point of application the filter becomes more
sophisticated allowing two improvements: the elimination of
more credit risks thereby allowing more competitive rates of
interest and the identification of more people with compulsion
disorders reducing the risk from inappropriate and excessive
government interference in the credit industry.
Fashion orientation and compulsive buying
Park and Burns establish that compulsive buyers are likely to
be very fashion oriented in their purchase behavior. Yet, for
many retailers fashion conscious and fashion oriented
individuals are an important target audience since they lead
the trends and are often the best customers.
However, it behooves us to act with a degree of caution
when giving credit on purchases. Indeed, the ease with which
retail credit is issued represents a great difficulty – changes to
regulation short of hire purchase controls with do little so long
as retailers can issue unsecured credit.
Park and Burns identify three central aspects of fashion
orientation – fashion leadership, interest in fashion and the
importance of being well-dressed. These factors clearly link to
compulsive behavior in that those who display such behavior
also display these characteristics. However, this does not
represent an adequate filter for retailers on its own.
At present the issuing of retail credit requires the
completion of a simple application form which, in the more
sophisticated retail credit markets, is then subject to some
form of automated credit check. This credit check is driven by
certain key data – address, known credit history and
demographics. In general terms marketers do not make use
of lifestyle data in determining whether to issue credit. The
issuing of credit is also, in part dependent on the accuracy of
the data (and, by implication the honesty of the potential
customer).
The role for public policy and regulation
Park and Burns observe that the credit card is the most
significant factor in encouraging compulsive buying and
suggest that since other antecedents of such behavior are hard
to pin down, regulatory action should focus on the control of
credit. It is clearly proper for the government to regulate the
issuing of credit both for the protection of individuals and for
wider economic reasons. But such regulation should be
confined to the prevention of excessive rates of interest,
ensuring that information given to borrowers is accurate and
complete, and in setting rules for the enforcement of debt
collection.
In the case of compulsive buying, two additional safeguards
may assist. Firstly, clinicians working with individuals liable to
compulsive behavior should be required to inform credit
agencies. And secondly, where credit is refused because of
suspected compulsive behavior, the credit referencing
agencies should be told. Both of these safeguards would
benefit from incorporation in consumer credit regulations.
Combined with the use of lifestyle data in determining
whether to give credit, the result should be a more effective
control than at present. However, we should remember that
the behavior of a minority should not result in the loss of
freedoms for the majority.
Lifestyle data and credit referencing
In the UK and the US the credit referencing agencies have
evolved from a process operation servicing the consumer
finance industry into far more outward looking businesses.
(A précis of the article “Fashion orientation, credit card use, and
compulsive buying”. Supplied by Marketing Consultants for
Emerald.)
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