The marketing of consumer credits by Freedom Rahoitus Oy and Bondora AS, Suomen sivuliike, violated the good lending practices outlined in the Consumer Protection Act. The companies emphasized the quickness of applying for and obtaining credit while downplaying the seriousness and implications of getting credit in their marketing. The Consumer Ombudsman also drew Lacuna Digital ApS (Swiftbanker)’s attention to the regulations concerning good lending practices.
The Consumer Ombudsman has examined how well creditors and credit intermediaries comply with good lending practice in their marketing. In 2023, a defined list of practices specifically contrary to good lending practicein the marketing of consumer credit was added to the Consumer Protection Act. For example, it is prohibited to downplay the seriousness and implications of taking out a credit.
The Consumer Ombudsman scrutinized the marketing of consumer credit on websites, social media, television, and radio, identifying several issues.
The marketing of credit must be conducted responsibly
For instance, Freedom Rahoitus’s marketing claimed in Finnish “Zmarta ra(u)hoittaa,” which translates both to “Zmarta finances” and “Zmarta calms”. The marketing also claimed that the borrower can say goodbye to sleepless nights. Such advertising messages create the impression that taking out a credit mitigates the negative effects of the consumer’s financial problems. Creating such an impression in marketing is contrary to good lending practices and is prohibited.
Marketing must not claim that a credit is cheaper than the consumer’s existing credits, if the claim is false, misleading, or cannot be substantiated. For example, Freedom Rahoitus’s marketing claimed that by consolidating loans, the consumer saves money. However, since Freedom Rahoitus could not have been aware of the terms of all existing loans of individuals visiting their website, the company could not prove that consolidating their loans would definitely save the customer money.
Credit must not be marketed as a mundane matter or as a means of fulfilling dreams, as such marketing downplays the seriousness of getting credit. For example, Bondora’s marketing suggested that by getting credit, one could fulfill their dreams. In contrast, Freedom Rahoitus’s marketing implied that credit could help in fulfilling dreams or financing expensive hobbies.
Bondora marketed obtaining a loan as “very quickly” and “immediately,” while Freedom Rahoitus claimed that a loan could be obtained online “in just a few minutes.” The quickness of applying for and getting credit must not be emphasized in marketing, as such marketing clearly undermines the consumer’s ability to carefully consider taking out or using credit.
”The loan applicant must be able to consider taking out a loan calmly without undue pressure or inducement. Therefore, marketing credit as a means of fulfilling dreams, eliminating problems, or providing quick solutions is contrary to good lending practices.”
Freedom Rahoitus, Bondora, and Swiftbanker Corrected Their Marketing
The Consumer Ombudsman required the companies to rectify their marketing practices that were in violation of the law. Freedom Rahoitus and Bondora have committed to complying with the Consumer Ombudsman’s requirements and have changed their marketing.
Additionally, the Consumer Ombudsman drew Swiftbanker’s attention to the regulations on good lending practice. On Swiftbanker’s website, the ability to obtain credit despite a payment default entry was marketed. However, good lending practice prohibits creditors and credit intermediaries from targeting credit marketing, for example, at consumers with payment default entries. For instance, it is prohibited to advertise in a manner which implies that a payment default entry or lack of regular income is not necessarily an obstacle to obtaining credit. The Consumer Ombudsman advised Swiftbanker on the substance of the regulations, and Swiftbanker has corrected its marketing.
In addition to Freedom Rahoitus, Bondora, and Swiftbanker, the Consumer Ombudsman has approached other credit companies and requested clarification on their practices in marketing loans. The results of the supervision will be reported later.
More on the topic
Consumer Ombudsman’s decision 16.9.2024, Swiftbanker / Lacuna Digital (in Finnish)