12 December 2012
Instant loan companies do not always provide all the necessary information on their websites. Some companies also use inappropriate methods to induce consumers to take out loans.
The Finnish Consumer Ombudsman has urged 77 instant loan companies to pay attention to the information they provide on their websites and to correct possible shortcomings. The action is based on a monitoring campaign conducted by the Finnish Consumer Ombudsman in the spring of 2011. Approximately 200 different websites from 100 companies were examined in the campaign.
The sweep investigation focused on, for example, whether companies provide on their websites the terms of the instant loans they offer and whether they encourage consumers to take out loans hastily.
According to law, a consumer must be able to become familiar with the loan terms before entering into a contract. Basic information about the credit and its provider should also be available to the consumer. Credit terms should be easily accessible on the home page of the company’s website. However, four of the companies included in the campaign had not placed the terms in an easily noticeable place on the website.
The creditor also has to act responsibly and follow good lending practices. Advertisements are not allowed to persuade consumers to take out loans on an impulse. It is also prohibited to advertise credit as an easy and quick solution to financial problems.
In the monitoring campaign, inappropriate advertisement slogans were found on the websites of 12 companies. The websites promised, for example, “a loan decision in 5 minutes”, “loans even for free” and “quick loans around the clock”.
In reality, instant credit payments to the customer’s bank account during night time have been prohibited since February 2010. If a customer applies for credit after 11 p.m., a company is allowed to deposit the money to the customer's bank account only after 7 a.m. Companies advertising round-the-clock loans may be counting on that consumers who have applied for a loan during the night will use the money anyway even though they may no longer have an immediate need for the money in the morning.
Before concluding a credit agreement, consumers should compare the costs of different alternatives by using the so called Standard European Consumer Credit Information form. The form includes information on, for example, the annual percentage rate of charge, the interest rate of the credit, the total payable amount of credit and the payment time. The Finnish Consumer Ombudsman has reminded instant loan companies that the form must be available to the consumer on the company’s website in good time before concluding the credit agreement.
The Finnish Consumer Ombudsman has demanded that the companies correct possible shortcomings in the content of their websites immediately. Otherwise the Ombudsman will intervene in their operations through other means of supervision. For example, the Finnish Consumer Ombudsman has already taken two instant loan companies, OPR-Vakuus and J.W.-Yhtiöt, to the Market Court this year.