Chile Retail Sector in Spotlight on Consumer Credit Scandal

Chilean retailers have the reputation as being some of the best operators in Latin America with such powerhouse companies as Falabella and Cencosud.  However, one of them, La Polar, the fourth largest retailer in Chile, is at the heart of a consumer credit fraud that is affecting not only their own performance but shaking confidence in the entire retail sector amidst speculation that increased attention and regulation will be just around the corner.

La Polar’s shares plunged almost 40 percent before trading was suspended after the company admitted to irregularities in their credit terms for over 400,000 customers.  La Polar’s interim President has resigned and the company has estimated it will need to set aside an extra $890 million to cover potential losses.

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