The Consumer Ombudsman is applying for an injunction on the payday loan company IPF Digital Finland on the grounds of unreasonable and unlawful credit conditions. The company has offered consumers the Credit24 Joustolimiitti flexible loan product. This consists of ongoing, running credit with a credit limit of between EUR 100 and EUR 4,000 and with a repayment period of 1 – 36 months. The company has not included the withdrawal fee in the credit costs when calculating the actual annual interest rate, giving consumers an inaccurate picture of the costs of the credit, which also distorts comparability between different types of consumer loans.
There is a widespread interpretation in the microlending sector that the highest fee charged in conjunction with credit withdrawal is not included in the actual annual interest rate. The Consumer Ombudsman considers it important to obtain the decision of the Market Court in the matter.
The credit costs of the Credit24 Joustolimiitti loan consist of an annual nominal interest rate, which is 40.8%, and a withdrawal fee, which is between 0% and 6.95% of the amount withdrawn. The first withdrawal of a Credit24 Joustoliimiitti loan is free of charge for consumers, but a fee of 6.95% or least EUR 5 is charged on subsequent withdrawals.
IPF Digital Finland Oy has not taken the highest withdrawal fee rate into account as a credit cost in marketing. When the highest withdrawal fee rate is taken into account in calculating the actual annual interests rate, the costs charged on Credit24 Joustolimiitti loans are in breach of the Consumer Protection Act, as this is a loan in an amount below EUR 2,000 or with a credit limit less than EUR 2,000.
In the application submitted to the Market Court on 21 March 2017, the Consumer Ombudsman demands that IPF Digital Finland Oy, when offering consumer credit, is prohibited from:
- Leaving out as credit cost the highest rate pursuant to the terms and conditions charged on credit withdrawal when calculating the actual interest rate in marketing credit and when entering into a credit agreement.
- Charging consumers credit costs more than the highest permitted actual annual interest pursuant to Chapter 7 of the Consumer Protection Act on non-goods or services-related loans whose credit limit or amount is less than EUR 2,000.
The Consumer Ombudsman requests both injunctions to be reinforced with a EUR 100,000 penalty payment.