Marketing consumer credits with insufficient information

Finland’s Regional State Administrative Agencies and the Finnish Competition and Consumer Authority (FCCA) have implemented a campaign of monitoring the marketing of credits. Shortcomings were found in more than half of all advertisements or websites. Some of the companies had neglected to make permanent changes to the deficiencies in their marketing.

In the monitoring campaign, the Regional State Administrative Agencies and the FCCA examined how companies offering credits report on their marketing in the information that they are required to give under the Consumer Protection Act. The Regional State Administrative Agencies examined the advertising and websites of 88 companies in the period between 1 November 2013 and 28 February 2014 – a total of 150 advertisements and websites.

The focus in the campaign was on both ordinary monetary credits, and card-based credits, which involve the possibility of withdrawing cash. However, credits involving the acquisition of household appliances, furniture, and cars were excluded from the campaign.

The Regional State Administrative Agencies found shortcomings in 93 advertisements or web pages and gave cautions to 31 companies behind them. The most frequent problem on a website was that the legally mandated information was scattered over a number of linked pages. In addition, the total costs of a loan, the nominal interest, and the real annual interest rate were disclosed vaguely, or were not disclosed at all. As a result of these shortcomings, the consumer is not given an accurate impression of the cost of the credit, or the conditions of the agreement.

On several websites, there was also no clear indication of whether or not the credit is a one-off credit, which is paid off completely after a specific time, or a continuous credit, which is available to the consumer with a fixed credit limit.

The granter of a credit must evaluate the consumer’s credit standing and ability to repay, but this is impossible if a credit is granted within a few minutes of the applicant submitting an application. In addition, many creditors market their credits as being interest-free, even though in reality, the lack of interest only applies to a short time, or to a partial withdrawal at the beginning of the credit relationship.

Most of the credit providers receiving the letter of caution altered their marketing practices. However, some of the companies have later changed their web pages in such a way that the legally required information is again presented inadequately.

The Regional State Administrative Agencies continue to scrutinise the marketing of the lenders. If the credit providers who were cautioned continue their illegal marketing, the Regional State Administrative Agency of Southern Finland can give the companies in question a warning, and if necessary, order them to cease operations for a fixed period of time. If the negligence still continues, a company which has been shut down for a fixed period of time can be removed from the Credit Provider Register. The Consumer Ombudsman can also take necessary enforcement measures.