Creditor’s liability

If the purchase has been paid for on credit, such as with a credit card, the creditor is responsible for the seller's breach of contract, for example, if the seller of the service or goods does not deliver the purchase or if there is an error in the product for which the seller is responsible.

This page provides information on when the creditor is liable and what may be required of them.

What does the creditor’s liability mean?

The creditor’s liability means that the seller and the creditor have joint liability when the consumer has paid for a purchase on credit.  On that basis, on account of the seller’s breach of contract, the consumer may also have the right not to pay the invoice or to receive a price reduction, damages or other monetary compensation from the creditor who financed the transaction.

The creditor’s liability only applies to commodity-linked loans.  A commodity-linked loan refers to a consumer credit intended for the acquisition of a particular commodity or service, granted by a seller or other company, such as a bank or other finance company. Commodity-linked loans also include special credit cards, such as those issued by retail chains, and general credit cards, such as credit cards issued by banks and finance companies.

Frequently asked questions

  • When you use your credit card, you pay from your credit card, and when you use your debit card, you pay directly from your bank account.

    Payment on credit provides financial security in situations where the purchase is not delivered or there is an error in the purchase which the seller refuses to compensate. At least an expensive purchase is therefore worth paying on the credit side of the card.

    For example, if you encounter problems when purchasing online, or if you purchase travel, and you pay with a credit card, you improve your chances of getting your money back.

    If you have paid for your purchase with a credit card and encounter problems, you can also demand a refund from the creditor or a credit card company, for example.

    For example, you can contact the creditor when the company does not deliver the purchase or the product has an error for which the seller is responsible. The creditor is not obligated to refund a sum larger than the one paid to the credit card company.

  • Situations caused by force majeure fall within the scope of the creditor’s liability, and, therefore, force majeure cannot justify rejecting the claim. Resubmit your claim by filing a complaint against the creditor.

Can the creditor be required to refund the money before the purchaser has contacted the seller?

In a problematic situation, the consumer should first contact the seller even if the seller has a statutory obligation to return the money without the consumer’s complaint.

The consumer does not have to wait a long time for the seller to respond to their complaint to be able to complain to the creditor.

Frequently asked questions

  • You can demand that the money be refunded by the creditor. The creditor may not refuse to process a claim for refunds or reject the claim on the grounds that the consumer has not first contacted the seller. File a new complaint against the creditor.

  • In some cases, the service provider has a statutory obligation to return the customer’s money without them being obliged to demand it first. Traveller’s rights concerning public transport vehicles depend on the vehicle and the mode of transport in question. Read more about consumer protection and the traveller

    • If a flight has been cancelled, the airline must offer the consumer a re-routing of the flight or a refund within 7 days.
    • If a package travel contract has been cancelled, the organiser must refund the payments without undue delay and within 14 days after cancellation of the package travel contract.

    If you have the right to get your money back from a seller or service provider, you can request a refund from the bank that issued the credit card. The credit card company cannot require you to primarily contact a company that provided the service you have purchased. Instead, you can choose which party you will be requesting a refund from. You should review any instructions and information on the schedule of refunds on the service provider’s website before submitting your claim to the credit card company.

    If you have already received your money back from a seller or service provider, you cannot request a refund from the credit card company. In addition, credit card companies have no obligation to refund a larger sum than they have received from you in the form of payments.

  • The creditor is responsible for the seller’s breach of contract and may not direct the consumer to first ascertain the coverage of the insurance. File a new claim to the creditor.

  • You can demand that the money be refunded by the creditor. The creditor may not refuse to process the claim for refunds or reject the claim on the grounds that the consumer has no reply to the complaint that he or she has filed against the seller. File a new complaint against the creditor.

In what situations is the creditor liable for the seller’s breach of contract?

When the goods or services have been paid for on credit, the consumer may submit his or her claim to the creditor such as a credit card company, among other things if:

  • the company does not deliver the purchase. For example, in a situation where it is obvious that the consumer has not received or will not receive the goods or services for which he or she has paid, such as a ticket for a concert or other event.
  • there is an error in the purchase for which the seller is responsible and which the company refuses to correct or otherwise compensate. For example, in a situation where the seller refuses to compensate for scratches on a sofa delivered home.
  • the seller has gone bankrupt. For example, in a situation where an airline or travel agency has gone bankrupt and the promised trip will not be arranged.

Frequently asked questions

  • If it appears likely that purchases will not be delivered despite your requests, you may request a refund from the creditor. File a complaint against the creditor stating that your purchase has not been delivered.

  • You may request a refund of the price of the flight from the credit card company.

  • You have the right to get your money back from the hotel. If your money is not refunded, you can demand that the money be refunded by the creditor on the basis of a breach of the service provider’s contract.

  • The creditors have sometimes rejected claims for a refund of flight ticket prices on the grounds that airlines have the right to cancel a flight under the terms of the agreement, and that the mere cancellation of a flight alone does not constitute a breach of contract. From the consumer’s point of view, however, the cancellation of a flight is a breach of contract on the basis of which the consumer can claim a refund from the creditor. File a new complaint against the creditor.

What can be required from a creditor on account of the seller’s breach of contract?

The consumer has the right to refrain from paying the fee or to receive a price reduction, compensation for damages or other financial compensation.

Compensation

The creditor is obliged to refund, in whole or in part, the amount paid by the consumer due to the seller’s breach of contract.

The creditor is not obligated to refund a sum larger than the one paid to the credit card company.

For example, if the consumer has the right to cancel a transaction, the creditor must refund the purchase price that it has received but does not have to compensate the consumer for any other costs that may arise from the cancellation of the transaction.

Frequently asked questions

  • The creditor has no obligation to refund a larger sum than they have received from you in the form of payments.

Refraining from payment

Because of the seller’s breach of contract, the consumer may refrain from paying part of the invoice that corresponds to the price of the unreceived purchase or the error in the purchase can be left unpaid.

Frequently asked questions

  • You can leave unpaid that portion of the invoice that corresponds to the price of the unreceived purchase. File a complaint against the creditor and explain why you refrain from paying.

What is the time limit for filing a claim for compensation to the creditor?

Consumer legislation does not provide for a period of time during which the consumer must file a complaint for a breach of contract against the creditor.

In its terms and conditions, the creditor may not set a time limit by which the consumer must submit his or her claim to the creditor.

Frequently asked questions

  • The Consumer Protection Act does not provide for a period of time during which the consumer must submit a claim for compensation to the creditor who financed the transaction, so your claim cannot be rejected on the basis of the elapsed time. File a new complaint against the creditor.

  • The chargeback system is the credit card issuer’s means of collecting the amount paid by the customer from the merchant’s bank in a situation where the customer has not received the purchase he has paid.

    Although chargeback schemes contain time limits binding on creditors, they cannot restrict the consumer’s right to recover his or her money from the creditor due to a breach contract by the seller. File a new complaint against the creditor.

This is how you can file a complaint against the creditor

If you paid for your purchase on credit, you can file a complaint against the creditor who financed the transaction, when the seller of the service or goods does not deliver the purchase, the purchase has been incorrectly invoiced or the product has a fault for which the seller is responsible.

1. Make sure that you have paid for your purchase with a credit card, for example.

2. File a new complaint against the creditor. Contact the credit card company or bank that granted the credit and financed the transaction.

Explain what has happened, what the issue is and what you are demanding.

If the purchase has been paid, you can require the creditor to refund all or part of the amount that you have paid for the goods or services.

If you have not yet paid the invoice for the credit, you can leave it completely or partially unpaid until it has been established that the invoice is in order.

  • If you consider only part of the invoice unfounded, pay the undisputed part of the invoice no later than on the due date.
  • If the invoice in its entirety is unfounded, you can leave the invoice completely unpaid.

3. If you cannot resolve the matter with the creditor, contact the Consumer Advisory Services of the Finnish Competition and Consumer Authority.

The FCCA’s Consumer Advisory Services provide free advice on consumer rights and mediation assistance in disputes between consumers and companies.
Consumer Advisory Service

Legislation and legal praxis

The creditor’s liability means that the consumer also has the right, due to a breach of contract by the seller / service provider, to submit his or her claim to the creditor who has financed the purchase. (Consumer Protection Act Chapter 7 Section 39)

A breach of contract means, for example, that the seller or service provider neglects its obligation to deliver the product in accordance with the contract within the agreed time.

A consumer who has the right to refrain from payment or to receive a price refund, damages or other monetary payment from the seller or service provider as a result of this breach of contract shall also have this right against the creditor who has financed the purchase or service. (Consumer Protection Act Chapter 7 Section 39 Subsection 1)

In terms of consumer protection, it is justified that in situations where the credit received by the purchaser is the result of an arrangement between the seller and an external financier to finance the seller’s sales activities, the purchaser’s position is similar due to the seller’s performance error, regardless of which party to the financing arrangement is formally the creditor.

The Consumer Protection Act does not provide for a period of time during which the consumer must submit his or her claim for compensation to the creditor who financed the transaction. For example, according to the ruling of the Supreme Court (KKO 2007:6), the right of the consumer against a creditor cannot be restricted in time (Chapter 7, section 39 of the Consumer Protection Act in force corresponds to Chapter 7, section 13 of the Consumer Protection Act at the time of the decision) .The Supreme Court has made statements on the creditor’s liability by its decision KKO 2007: 6. The creditor had argued that the consumer no longer was entitled to pursue claims against it because the consumer had not complained of the invoice within the 14-day period laid down in the terms and conditions of use of the card and because the claim that had been submitted to the creditor as late as more than one and a half years after the order was placed had in any event been made too late. The Supreme Court ruled that the order attached to the terms and conditions of the card regarding the time of making a complaint could not restrict the submission of an objection against the creditor under the Consumer Protection Act. Consequently, the fact that the consumer did not submit a complaint within the period of time laid down in the terms of use of the card was irrelevant in terms of the creditor’s liability under that provision.