Supervisory campaign: deficiencies revealed in car credit advertising

A supervisory campaign conducted by the Consumer Ombudsman and the state regional administrative authorities in autumn 2016 showed that advertisements for car credit provide incomplete or unclear information. In many advertisements, only one aspect of the credit terms was emphasised while the remaining mandatory information was provided in the small print. According to consumer protection regulations, however, all the credit terms must be presented clearly and concisely.

The focus of the supervisory campaign by the state regional administration was on the advertising practices of car dealerships who also offered car credit.  The purpose of the campaign was to stop false car credit advertising and at the same time collect information on what type of advertising claims were being made in car credit advertising in print media and on the radio. The state regional administration reviewed 1,078 car advertisements published in the press and through direct marketing. In more than half of these advertisements, car credit was advertised with inadequate information. 

Unclear information

According to the Consumer Protection Act, the credit provider must provide the consumer with certain mandatory information on consumer credit in connection with the advertisement. If an advertisement provides even one figure indicative of the terms of the loan, such as the amount of a monthly instalment payment, all other information required by law must also be provided in the same connection in a clear and concise manner. Such mandatory information includes the nominal interest rate, the effective annual interest charges, the duration of the credit agreement and the number of instalments. The name of the credit provider must also be clearly expressed in the advertisement.  In print media, the information was often presented so that it could not be read without difficulty.

The Consumer Ombudsman stresses that both the car dealership marketing the car credit and the actual credit provider are responsible for the lawfulness of their advertising. Both parties are also to ensure that the establishment costs or similar charges are included in the total credit costs and factored into the effective annual interest rate.

Consideration should also be given to the suitability of the chosen media for credit advertising. In some media, such as television, presenting the mandatory information about the credit terms as required by law may be difficult.

As part of the supervisory campaign, the Consumer Ombudsman also reviewed television advertising on car credit. In advertisements shown on television, the mandatory information on credit terms were typically presented at a very fast pace so that the viewers would not be able to observe them in a normal viewing situation. The advertisements would, for example, visibly emphasise one aspect of the credit terms while giving the other credit details much less attention. Even on television, the credit terms must be presented so that the viewer is able to read them without difficulty. The Consumer Ombudsman wants to remind credit providers that mentioning one credit term in an advertisement means that all the other terms must be also be presented in a clear and concise manner.

The Consumer Ombudsman will continue close monitoring of car credit advertising and will address any issues with relevant operators.

The new guidelines on the marketing of consumer credit issued by the Consumer Ombudsman in 2017 provide businesses with instructions, practical advice and information regarding the application of the provisions.