Marc Brown loves to shop at BrightHouse. Over the past couple of years, he has bought a television, two sofas and a hi-fi from the store, and today he has come in to buy two tablet computers, one for himself and one for his mother. With BrightHouse there is no need to pay straight away; instead, the price is divided into small weekly chunks, repayable over the next few years.

Since he began shopping with BrightHouse, his weekly payments have gradually notched up. Once the cost of the new tablets is added, Marc, 38, a former Southwark council employee who lost his job in 2007, will be paying BrightHouse £103 a week. He receives about £140 a week in benefits payments, leaving him £37 a week for everything else. "My mum helps with the bills," he says. His enthusiasm for the model is undented by the steep weekly charge. He likes the system for its "affordability".

In the post-recession reshaping of the British high street, there have been several notable winners: the payday lenders, betting shops and BrightHouse, supplier of TVs and sofas on credit, to people who cannot afford upfront payment.

"I can think of no better marker of social deprivation than having a BrightHouse store open in your area," writes Karl Dayson, an academic studying affordable finance. If he is right, that deprivation is spreading fast. Last year, the chain opened a new shop a fortnight, and has launched 124 new stores, cheerfully branded in orange, over the past five years, bringing the total to 288. The company has identified another 400 possible locations across the UK where new stores could be opened, as part of an aggressive campaign to bring its unique rent-to-own, high-interest model to more customers.

Debt charities are dismayed by this expansion, pointing to the high cost of BrightHouse's goods and the 69.9% APR on many of the store's products, which might make a washing machine that costs £399 from Currys end up costing almost four times that amount from BrightHouse: £1,560, broken down into seductively affordable £10 weekly instalments. This is known as the poverty premium: the poorer you are, the more you pay.

"BrightHouse represents a high-cost form of credit which, like payday loans, appears to be thriving in these straitened economic times," warns a spokesman for StepChange, the debt charity.

Debt adviser Anne Young: 'These companies are preying on people who can’t afford to go anywhere else. I do think they are robbing the poor, when you look at their prices.' Photograph: Mimi Mollica for the Guardian

Anne Young, an adviser with debt-counselling charity Christians Against Poverty in Middlesbrough, who has helped many BrightHouse customers untangle their money problems, is blunter in her assessment. "These companies are preying on people who can't afford to go anywhere else. I do think they are robbing the poor, when you look at their prices. They're charging a ridiculous amount of money for stuff you can get on the high street for a third of the price."

She knows of families who have cut down on the amount of food they buy for their children in order to meet BrightHouse payments. When she walks past her local branch, she has to stop herself marching in and hauling customers out. "I want to go in and say, 'No! Don't sign!' I want to go in and shout, 'You robbers! You absolute robbers!'"

The company's chief executive, Leo McKee, argues that the business gives people who have no access to credit a means of buying essential items that would otherwise be denied them. Buying a sofa or a television or an oven from BrightHouse is, he says, a better option than going to a loan shark, which is probably true, but it isn't a brilliant benchmark. The way McKee describes it, this easy-to-budget model, where purchases are priced in weekly repayments (ranging between £3.50 a week for a table and £26 a week for a sofa), represents a valuable, morally justifiable service to low-income households.

It is a quiet Tuesday afternoon at BrightHouse in Elephant & Castle, in a rundown south London shopping centre. A few people are browsing, some are sheltering from the rain outside.

One woman comes in with her six-year-old son and sits on the leather sofas in front of the bank of televisions for 10 minutes, having a rest. She has never bought anything from BrightHouse and isn't planning to. "I would rather buy it at once," she says, peering at the price tags beneath the televisions and jabbing at the interest rates. "I heard if you don't pay, they can send the bailiffs to your home to remove the product. They do it for their own interest; it's them who is winning, not the customers. It's horrendous how high the prices are." She sees the shop as a place you might go if you were struggling with your money. "My husband is a market trader; there's money coming in."

David Box comes with his wife Jayne and two of their four children (Piper, seven, and Courtney, 13). They want to buy a television for their son, who is about to have his 11th birthday. They are moving to a bigger house and he will be getting his own room for the first time, so they want to let him have a place to watch his DVDs. David, who has worked as a bus driver since 1999, is thinking about getting him a 3D television, but Jayne (who also works, delivering prescriptions to people who are unable to leave their homes) insists that this will be bad for his eyes and will not contemplate it.

"This is fun," Piper says, and lies down on one of the showroom beds.

Her mum shoos her off. "It's not a playground."

They choose a small Baird (BrightHouse's own brand) that will cost them £606.84 over 156 weeks. "It's affordable for us," Jayne says. "If something goes wrong in the first three years, you get it fixed or you get another one."

It's an odd argument, because even if it did go wrong, repeatedly (which televisions no longer tend to do), for that price you could buy six similar-sized new televisions from Argos (£99.99). Could a television break that many times in three years? "It could. You don't know. If my son knocks it over, we're all covered."

‘It’s affordable for us. We’d rather pay over longer’: David and Jayne Box with children Courtney and Piper. Photograph: Mimi Mollica for the Guardian

The family has bought "countless" products from the shop over the past eight years: beds, a washing machine, a freezer, a stereo. Jayne likes the payment model, explaining that with four kids who want dance classes and new school uniforms, "we'd rather pay over longer". She says the high interest "doesn't bother us… Before you put pen to paper, you talk about it." She describes the weekly payments as "affordable" and she likes the service cover, with people ready to come out to mend broken appliances. "It means you have money to spare, so if the children come home with a letter for a school trip, you don't have to say no."

They are currently paying out £62.25 a week to the company, which David says is considerably less than a day's wages (he earns between £120 and £135 for a day's work). They are careful never to overstretch themselves and have never owed BrightHouse more than £84 a week.

Leo McKee stands outside the shop, pointing out his company's chief design features: "We show products in a room-style setting; the customer should be able to walk around with a buggy." As he talks, an elderly woman comes up and asks if he is a security guard and, if so, can he please do something about the three homeless people sitting outside, their belongings loaded up on old prams. "How long have we had dossers here?" she says. "No wonder no one can sit down." He promises to look into the matter and we move to a back room behind the shop floor to continue talking.

A few moments into the conversation, I pop out to find the Guardian photographer, leaving my Dictaphone running. When I play the recording back later, I hear silence as I leave the room and a few sighs. Then McKee says in his friendly, Glaswegian voice: "You never know if it's going to be good or bad, do you? They're all the same: as nice as…" and there is a mumbled word, hard to make out, that sounds like knives, nails or needles.

The man from Brunswick, the PR firm representing BrightHouse, replies soothingly, "That's absolutely right. You know, she could come out with a negative standpoint or she could be fair. Exactly. But, as I keep saying: we're doing the right thing." Then there is some muttering and rustling of papers, and I hear my own voice returning to the room, apologising and beginning the interview again.

This is the fundamental difficulty for BrightHouse. Debt campaigners condemn the model for being expensive, confusing and exploitative. Usually when this little-noticed brand gets into the news, it is not for good reasons. But BrightHouse representatives make a valiant attempt at promoting what they do as something akin to a public service.

Chastened by their scepticism, I'm anxious to be fair. So here is McKee making a powerful case for BrightHouse, describing how it gives families who need a washing machine, for example, a way of getting one immediately and paying for it slowly, over the long term, in payments of £6 or £7 a week. "The customer knows that she can pay that money and get a washing machine. She can plan," he says. "What you have to appreciate is that, for my customer, it may well be that the alternative to buying the washing machine is they go to the launderette every weekend."

More than 50% of his customers will be wholly or partially on benefits; if they work, most will do so part time; the average customer will be aged between 26 and 45, with a household income of £13,000; mostly they are female. The company has recently simplified its payment model, so that the bewildering choice of insurance and protection policies has all been rolled into one understandable price tag.

BrightHouse chief executive, Leo McKee: 'People have always had to buy beds, sofas, washing machines. This format, whereby people need access to credit in order to purchase essentials, has been there for a long, long time.' Photograph: Mimi Mollica for the Guardian

"You have to look at what the alternatives for that market are if they don't go to BrightHouse," McKee says. "People have always had to buy beds, sofas, washing machines. This format, whereby people need access to credit in order to purchase essentials, has been there for a long, long time. I put it to you that it is not so different from the mortgage on the house."

BrightHouse is a hybrid of a shop such as Argos and a loan company, aimed at people who might have trouble getting a credit card. "I see myself, first, as selling furniture and electrical products on the UK high street," McKee says. "These are need products, essential products, not fripperies. Then, second, as providing a financial services mechanism, whereby the customer can afford them."

These arguments are less persuasive when they are unpicked. The comparison to a house is not a valid one: a house is an asset you can sell again, whereas the sofa or television is something that will diminish in value to the point of worthlessness. The argument about slowly buying a washing machine, thereby avoiding the cost of launderettes, really applies only to washing machines. Despite what McKee argues, quite a number of the shop's products are closer to fripperies than need products. Take, say, the X-rocker Suzuka Gaming Chair (with built-in vibration, 2.1 audio system with subwoofer, Wi-Fi connectivity to gaming consoles, £2.50 a week, £161.12 flat cost, £260 over 104 weeks, with an APR of 69.9%).

Considering whether or not these are essentials quickly leads to contentious territory. Not everyone sees televisions as vital products, and it is amazing how politicised the size and flatness of the television screen has become. When he was promoting his latest series last month, Jamie Oliver wrestled with an issue that has preoccupied Daily Mail writers and rightwing politicians for years: the weird debate about poverty and ownership of televisions, and the peculiar idea that no one with a large, flatscreen TV is actually poor. "[You see a poor] mum and the kids eating chips and cheese out of a Styrofoam container," Oliver said, "and behind them is a massive TV." It is an odd, dated argument, because it glosses over the fact that it is now very difficult to buy a non-flatscreen, non-plasma television, and that TVs are actually not that expensive (unless you opt for the BrightHouse 46-inch Samsung 3D television, which is £1,950.70, and will end up costing £3,744 over 156 weeks of £24 weekly payments).

On the television and poverty debate, McKee makes an interesting point: "Before you just jump in and make blanket criticisms, you've got to understand lifestyle and the significance of the full-screen television. I would say that in the wealthier echelons of society, they watch a lot less television than the social demographic I'm speaking of. This is why the sofa is so important to them, and the television is so important to them, because their life is home-centric. They socialise with their friends who live in the same street or in the next street. Conspicuous excess is not widespread, as far as I can see.

"If I look at the products that we sell," McKee goes on, "they have a utilitarian purpose or in some cases an educational purpose. We are selling products that play a critical role in the home. And if that happens to be an Xbox, then, yes, it's an Xbox. It's not going to the theatre: it's home entertainment. It's cheaper."

McKee is frustrated by the prevailing rush to demonise people who receive benefits by scrutinising their spending patterns, and is dismissive of the newspaper articles condemning their lifestyles. "My experience of our customers is that the vast majority are pretty responsible, and there isn't to my knowledge a proliferation of benefit millionaires. Our customers have to budget prudently."

Ultimately, this discussion of what constitutes a frippery and what's a need product is a red herring, because concerns about BrightHouse aren't sparked by a desire to judge people on what they choose to buy. The only real issue is the startlingly high price of the goods on offer, and the suspicion that you would choose to shop here only if you had no real choice. Buying things at BrightHouse is just going to make you poorer.

The company report, illustrated with smiling models with mesmerisingly perfect teeth, highlights the "unambiguous price promise": "If you find an identical product at a cheaper cash price on the high street, we'll match that price." It's difficult to find identical products, because a lot of the items are made exclusively for BrightHouse, or bundled up with extra features that rival shops don't throw in, and the pricing structure is so complex that it is hard to tell if the product is actually cheaper.

Take three products for which the comparison appears easier to make, however, and the contrast is stark. BrightHouse's website offers the Samsung Galaxy Tab 3 10.1 inch 16GB, at £580.02, paid for over 104 weeks, at £9 a week, which, with the 69.9% APR, will end up costing £936. You can buy an identical product at Tesco (although possibly without pre-installed apps, of unknown value) for £329, or from John Lewis for £329.95.

Or you can buy an HP Envy 120 All-In-One Printer from BrightHouse for £322.23, which, with 69.9% interest, and paying £5 a week over 104 weeks, will cost you £520. John Lewis has the same product for £149.99, Apple for £199.95.

If you're feeling very extravagant, you can buy that 46-inch Samsung 3D TV for £1,950.70, which is already £450 more expensive than Samsung's own recommended retail price of £1,499.99, and which will, after the three years of payments, end up costing you £3,744.

"Prices differ because, unlike other retailers, our prices include an unrivalled package of services covering delivery, installation, repair of faulty goods and cover against fire, theft and accidental damage," a BrightHouse spokesman says.

Debt adviser Young thinks there is a reluctance among customers to look at the small print, combined with very seductive sales techniques. "Temptation is a massive part of it," she says. "You get a call saying, 'There are some lovely sofas in, would you like to come and have a look?' They tell you you're a valued customer; you think, 'Well, if they think I can afford it, it's probably OK.' But mostly they're on benefits. If they had enough money, they'd be shopping somewhere else. I don't judge people for going there. I might do the same if I didn't have any choice."

It isn't hard to find customers who have discovered that they cannot afford to keep up the payments on the expensive things they have begun to buy. People such as Freda, from Middlesbrough, who is so embarrassed about not being able to complete the payments on her fridge freezer that she does not want to give her real name. She committed herself to paying about £1,800 over three years for a product she thinks would have cost about £900 if she had been able to buy it outright, but three months before she finished paying for it, she lost her job and was unable to make the final payments of about £55 a month. She called to see if she could reduce the payments, but was told that wouldn't be possible, and two men came in a van to remove the item from her kitchen. "There was no empathy whatsoever," she says. "I didn't complain. I was so embarrassed. But I was devastated. I had wasted all this money and got nothing in the end. I felt like I'd been robbed."

But she understands why she chose to buy something she knew would work out very expensive in the end. "When you're desperate, you don't think about it. You go into the shop, everything is shiny, they tell you that you can have it in your home in three days."

Aside from the fridge freezer, she also bought (and managed to pay for) a television for her grandson. She thinks she paid a "couple of thousand" pounds for it, in £29.99 weekly chunks. "I knew it shouldn't cost that much, but I didn't have anything for him for Christmas. There was no problem, they said: I could just take it away and they'd add the extra payments to my account. I was over the moon. I wasn't thinking about how much it would cost, just how happy he would be."

She found the removal of her fridge freezer a "degrading" experience, and will not be shopping with the company again. The charity Christians Against Poverty bought her a new fridge. A BrightHouse spokesman said it was impossible to comment on Freda's case because she did not want to be identified, but added, "We are surprised and disappointed by her complaint… Customer surrender of goods is always a last resort."

But "Citizens Advice have helped with over 14,000 problems with hire purchase arrears in the past year," says Gillian Guy, chief executive of the national charity. "If payment problems can't be resolved, then families face having the items taken away, even though they may already have paid far more than the products are worth."

The Consumer Action Group website, a free advice site run by volunteers, has a permanent section devoted to BrightHouse-related problems. A typical thread from September reveals that a poster has fallen behind "as we're really struggling at the moment financially". The problems were sparked by the arrival of a new baby. "Last week we had two choices: pay BrightHouse what was left in the bank (not enough to cover payment anyhow) or buy bits we needed for the house (milk, bread, toilet rolls, etc), so obviously BrightHouse never got paid."

Elsewhere, an anonymous adviser on the site expresses despondency at BrightHouse's enduring popularity. "It's not CAG's way to be judgmental, but I become quite frustrated when I see that people have pretty much furnished their homes and bought computers, phones and TVs as well from this company. If they could only do without for a few months, they could probably get a far better deal from a decent store and save themselves a whole bushel of grief."

This is also the conclusion of a former BrightHouse salesman, who emails to say that he now feels ashamed of having both worked and shopped there. "I would strongly advise people not to go to BrightHouse," he says. "But the problem with society today is that we like to have things now; I like to have things yesterday. A lot of people feel like that, especially where technology is concerned. BrightHouse makes it easier for people who maybe can't afford it, who want to look as though they are doing better than they are, to show their friends, and make them think, 'Oh well, he's not doing so badly.' But you are just piling up on credit and pushing the problems into the future." He asks not to be named, because he lives in the community where he worked and is uncomfortable about causing trouble. "The biggest problem is the inflated prices. You find yourself in a vicious circle."

Like 30% of BrightHouse's 3,300 employees, he is a former customer. He was also on disability benefits before he took the BrightHouse job and, when he looks through his old credit statements, he cannot comprehend how at times he was paying BrightHouse £75 of his weekly income of £100. "I was a customer for four years before I joined them. My fridge broke at a time when I didn't have much money and it was a convenient way of paying. But when I look back at the statements, the amount I paid is astronomical, especially when I was getting incapacity benefit of around £100 a week. There was one stage when I was paying back £75 a week. I have no idea how I was surviving."

Staff are under pressure to meet monthly targets to get the bonus element of their pay, he says, and will even work on customers' children, saying, "Get your dad to buy you this; tell your mum to get you that." Goods that have been seized back from customers, for nonpayment, are cleaned, repaired and rebranded as "quality refurbished products", at still high prices, he says, which staff are expected to sell to earn their bonus. "We weren't supposed to sell to people who had missed a payment in the past 12 weeks, but that went by the wayside in the runup to Christmas, when they needed to boost the number of agreements signed."

From around now until Christmas, BrightHouse staff will be pushing new games and technology to customers when they come in to make their weekly payments, he says. He feels particularly uneasy about his role in encouraging an unemployed, disabled customer gradually to notch up the number of things he bought, so that eventually he was paying back £300 a week. "He was a great guy, with a weak spot for technology. He was on disability benefits and I was selling him technology, consoles, mobile phones, knowing that he was struggling. But then, that was my job." The man came into the shop, visibly distressed, on a number of occasions, to renegotiate his contract. "I'm ashamed of what I was party to. He was exploited."

The salesman left BrightHouse because his own health deteriorated again, but he was already disaffected with the company and his managers' constant requests that he should be more aggressive in his sales pitch. He goes out of his way now to advise people not to shop there.

There is no sign of aggressive selling techniques during my highly supervised visit to the Elephant & Castle branch, but by encouraging people to return to the shop every week to make their payments in cash, the shop has a potent system for parading its wares and subtly instilling new desire. There's no need to resort to the hard sell.

Marc Brown, like around 50% of BrightHouse's customers, makes weekly cash payments. "You come in and see friendly faces," he says. "You look at the products you would like to buy next time around. I'd like a new fridge freezer, because ours is on the way out."

His description of paying BrightHouse £103 a week out of his £140 income dismays Andy Smith, director of marketing, who is hovering nearby. McKee has made much of his commitment to affordability and to credit checks. "We assess affordability," Smith says. "A normal ratio for us is 10% of a customer's income. An average customer will spend £25 a week." The company's annual report promises: "Our aim is to be the best in the rent-to-own retail market, offering the best products at the best prices in order to bring value into our customers' lives. We recognise that we have a responsibility to our customers to lend them only what they can afford to repay." But Brown appears to be making payments equivalent to 73% of his income.

Some days later, I receive an email from a partner at PR firm Brunswick, commenting that the company has looked into the case further. "While you'll appreciate I cannot go into customers' finances with you without their permission," it states, "can I assure you that, as with all our customers, credit checks were undertaken and BrightHouse is comfortable it is not lending Mr Brown more than he can afford."

As he makes his way to collect the two tablets that staff have reserved for him, Brown insists he feels upbeat about the service BrightHouse offers. Though, as he also points out, "If you haven't got the money upfront, you don't have a choice."