In the latter part of 2017, the Regional State Administrative Agencies and the Consumer Ombudsman conducted a joint supervisory campaign which ascertained whether the consumer credit advertisements by household appliances and furniture stores were providing the information required by the Consumer Protection Act. There were deficiencies in press and direct mail advertising, as well as in-store advertising. The commonest type of shortcoming concerned a model calculation for revolving credit which was not easily readable and which appeared to lack information such as the borrowing rate, the total amount of credit and borrowing costs, and in some cases the actual annual percentage rate.
The aim of the supervisory campaign conducted between September and November 2017 was to obtain an overall picture of whether consumer credit advertising by furniture and household appliance stores complies with the law and whether stores provide consumers with a ‘Standard European Consumer Credit Information’ form, as required by law, in good time before signing a credit agreement.
During the course of the campaign, a total of 557 advertisements were assessed and the Regional State Administrative Agencies made on-site visits to 219 stores. Deficiencies were found and 71 admonitions were issued to credit intermediaries.
The stores acting as credit intermediaries frequently defended deficiencies in advertising by stating that responsibility for the accuracy of an advertisement lies with the credit financer. The Consumer Ombudsman points out that both financers and retailers are responsible for the accuracy of advertising.
The law specifies the credit information with which consumers must be provided
The Consumer Protection Act defines the consumer credit information that the credit provider must provide in its advertising. If an advertisement indicates the borrowing rate, another figure describing costs to be charged on credit or other information concerning the terms of the credit agreement, all other information defined by law must also be provided in a clear and concise manner. This information includes the actual annual percentage rate of the credit, the borrowing rate and other borrowing costs, the credit amount or credit limit, the duration of the credit agreement, the cash price of the commodity and any deposit, the total amount of credit and borrowing costs, and the number of instalments. Such information must comply with the credit terms normally offered by the credit provider.
It is illegal, for example, to place this mandatory information in an advertisement using a font size so small that it cannot be read without difficulty. All information must be provided in the same connection.
The Consumer Protection Act also requires that the credit provider and the credit intermediary provide the consumer with a ‘Standard European Consumer Credit Information’ form in good time before signing a credit agreement. This provides information on issues such as the credit provider, the credit being offered,borrowing costs, credit repayment and the commodity for which credit is being provided. The aim of the form in question is to improve the comparability of credit offers. For this reason it should be provided to the consumer in good time before signing a credit agreement and not, for example, after the credit agreement has been approved.
The Consumer Ombudsman will also monitor consumer credit advertising in the future, in cooperation with the Regional State Administrative Agencies.
- Supervisory campaign: deficiencies revealed in car credit advertising. Press Release by the Finnish Competition and Consumer Authority, 8 May 2017.