Brussels, 10/01/2012 (Agence Europe) - 70% of internet sites offering consumer credit do not comply with EU law, whether this be the consumer credit directive which seeks to allow consumers to better understand and more easily compare offers or other texts in a whole panoply of legislation (the distance marketing of financial services directive, the unfair commercial practices directive, the e-commerce directive or the unfair contract terms directive). This was revealed on 10 January, with the alarming preliminary results of an investigation carried out in September 2011 into consumer credit websites in all 27 EU member states and in Norway and Iceland. Of the 562 sites checked by national consumer rights authorities, only 30% passed the checks on compliance with EU law. The other 70%, 393 sites, will now be investigated more thoroughly as part of the coordinated “sweep” operations. If sites failed the test it was because there were irregularities in the information given to consumers that was supposed to allow them to make more informed choices. Summarising the issue for the press, European Consumer Protection Commissioner John Dalli said: “When people look for credit they sometimes discover that this credit turns out to be more expensive than it had originally appeared, because important information was sometimes unclear or missing. Consumer credit is not always easy to understand, which is why there is European legislation in place to help consumers make informed decisions. It is therefore very important that businesses provide consumers with the correct and necessary information.”
Three main types of problem were identified: - missing information in consumer credit advertising: advertising on 258 (46% of websites checked) did not include all the standard information required by the Consumer Credit Directive, for example, the annual percentage rate of charge (APR), which is essential to compare offers, information on whether charges on obligatory ancillary services (such as insurance) were included in the total cost, or on the duration of the credit agreement; - omission of key information on the offer: 244 (43%) websites did not give clear information about all the different elements of the total cost, for example, on the type of interest rate, (fixed, variable or both), on the duration of the credit (if applicable), and on some of the costs related to the credit (such as an arrangement fee, for instance); - misleading presentation of the costs where the cost of the credit is displayed in a way which is false or could deceive consumers, for example, in the way the price is calculated, or the consumer is not informed that, beyond the cost of the consumer credit itself, there is an added obligatory insurance. 116 websites (20%) of the websites displayed this kind of problem.
Stressing the value of cooperation among national authorities, the commissioner said that these authorities will now contact the websites which failed the sweep test and call on them to rectify problems identified. He said he was sure that the sites would do what was required as quickly as possible to bring themselves into line with the law and so avoid penalties that member states can impose. He said: “I call on financial institutions and intermediaries to provide consumers with the information they need” to increase confidence and make the consumer credit market more effective.
Unacceptable, says BEUC. The European Consumer Organisation, BEUC, says that it is “unacceptable” that 70% of the websites investigated do not comply with EU law. “Unless financial service providers change their practice and offer clear and correct information on the total cost, the duration of a contract or the type of credit, consumers will not be able to get the credit which best suits them. It is therefore key that national authorities step up their efforts to enforce EU rules correctly. Laws to protect consumers do not have any effect when they are not properly implemented. Unfortunately, BEUC findings clearly show an intolerable lack of financial supervision in too many member states”, regrets BEUC Director General Monique Goyens. She adds: “Millions of consumers are struggling to pay bills. A wrong credit can have major effects for people with financial difficulties. Across Europe, millions of households are over-indebted. These people cannot afford a bad deal. If misleading or missing information lures consumers into a bad credit contract, this can have huge implications for them”. BEUC urges national authorities to take all necessary steps to prevent “improper behaviour by traders” leaving consumers in dangerous financial straits.
Sweep operations have previously been carried out into websites selling show and sports tickets (see EUROPE 10436); electronic goods (see EUROPE 10216) and, earlier still, aeroplane tickets. (AN/transl.rt)