29 November 2016
The Consumer Ombudsman applies for an injunction on the payday loan company 4finance on grounds of unreasonable and unlawful credit conditions, and unlawful credit granting practice. The company markets and grants EUR 2010 one-time credit with a repayment period of 30 days via their website Vivus.fi.
If the consumer cannot pay their credit back within the agreed loan period, the late-payment interest rate or alternatively the cost of postponing the due date offered by the company is the running nominal interest rate of 0.5 percent per day, making the annual interest rate 182.5 percent. Without amortisations the EUR 2010 credit taken out by the consumer amounts to EUR 4145 in six months.
Four applications for injunction, four EUR 100,000 penalty payments
In the application submitted to the Market Court on 24 November 2016 the Consumer Ombudsman demands that 4finance Oy is prohibited, in its consumer credit operations, from:
- Using a practice where information about the credit and the credit provider pursuant to the Consumer Protection Act is not delivered, in a permanent format to the consumer, well in advance of entering into the credit agreement. The purpose of the advance information, provided well in advance of entering into the agreement and in a permanent format, is to ensure that the consumer considers taking on the credit and that he or she receives the information about the credit and the credit provider set by law. Delivering this information to the consumer when entering into the agreement or after it is in violation of the law.
- Using a practice where the interest rate is not given as an annual interest rate in marketing, when entering into a contract or in the contract terms and conditions. It is misleading to consumers to give the interest rate of the credit in marketing and when entering into the agreement as the monthly or even the daily interest rate instead of the annual interest rate. The EU Consumer Credit Directive requires that the interest rate be given as the annual interest rate in marketing and credit agreements.
- Using contract terms based on which the credit late-payment interest rate is unreasonably high, i.e. more than the amount permitted by the interest rate restriction of the Consumer Protection Act, which is currently 50 percentage points. The Consumer Ombudsman deems that the 182.5 percent late-payment interest rate terms used by the company are unreasonable for the consumer.
- Using contract terms based on which the consumer is charged more than the collection costs of a delayed payment pursuant to the Debt Collection Act and an interest rate corresponding to, but no more than, the interest rate ceiling pursuant to the Consumer Protection Act of late-payment interest rate for the corresponding period, when an extension on the repayment period is agreed on before the due date. A consumer who requests an extension to the repayment period before the due date cannot be put in a worse position compared to a consumer who does not pay the credit back.
The Consumer Ombudsman requests each injunction to be reinforced with a EUR 100,000 penalty payment.
The Consumer Ombudsman's study on the credit market: The interest rate ceiling must be extended without delay to apply to all consumer credit. Finnish Competition and Consumer Authority press release, 23 September 2016.