Market Court ruling on collection costs of standing subscriptions: a prohibition and conditional file imposed on Alektum Oy

On application filed by the Consumer Ombudsman, the Market Court has prohibited collection agency Alektum Oy’s illegal debt collection activities related to the collection costs of standing subscriptions. A conditional fine of EUR 200,000 was imposed by the Market Court to enforce this prohibition. Alektum had sent consumers more collection letters concerning consecutive unpaid shipments of goods based on a single contract than what is permitted by the law. Alektum has also charged excessive costs for some of these payment demand letters.

Alektum’s illegal debt collection activities concern standing subscriptions consumers have made by telephone or online. Consumers have ordered socks, underwear, razor blades, health food supplements and slimming products from such companies as Westerfield, MMBG and Fennotuonti. What these contracts had in common is that they included an inexpensive or free-of-charge sample shipment, after which the contract has continued either until further notice or for a fixed period.

When the consumers had not paid the invoices for the products sent to them, the companies transferred the collection of invoices to Alektum. Alektum has processed each shipment of goods worth a few dozen euros based on the same order agreement as a separate contract on the grounds that the consumer has at all times had the opportunity to terminate the order agreement or cancel the next shipment by the date stated in the previous invoice. For each overdue invoice for a shipment of goods, Alektum has sent the consumers two payment demands subject to a charge. The collection costs charged for the first demand were EUR 14, while the charge for the second demand was one half of this amount, or EUR 7. The collection costs for payment demands concerning ten shipments, for example, totalled EUR 210.

In principle, the Debt Collection Act limits the number of payment demands subject to a charge and related to the same order agreement to two. This number may only be exceeded if there is a special reason to send more payment demands. In its ruling, the Market Court found that the number of two payment demands concerning a single contract may be exceeded if a customer has again failed to pay for a subsequent consignment. The collection costs of subsequent payment demands may not, however, exceed one half of the costs charged for the first demand.

In the case of ten unpaid consignments, the collection costs incurred from payment demands concerning the first shipment may be at most EUR 21, and at most EUR 7 per consignment for the subsequent nine shipments, or no more than EUR 84 in total.

On 20 June 2019, the Market Court prohibited Alektum from illegally increasing the debtors’ collection costs when collecting overdue invoices based on a single order agreement. To enforce this prohibition, the Market Court imposed a conditional fine of EUR 200,000 on Alektum.

In January 2019, the Regional State Administrative Agency cancelled Alektum’s debt collection licence as serious shortcomings had repeatedly come to light in the company’s activities.