European Commission performs ‘mini-sweep’ on consumer credit

The European Commission has published details of a ‘mini-sweep’ on websites advertising and selling consumer credit products in 13 EU member states and 2 EEA countries.

The Commission’s main objective was to check on various technical devices (PC, tablets, smartphones), whether traders comply with EU consumer rules on standard information in online advertising of consumer credit, for misleading adverts and information and any ‘aggressively’ exploitative offers.

The sweep caught 118 websites, of which 42 (36%), were flagged for potential deviations from EU consumer law. National authorities in the participating countries will be following up on the flagged cases.

Key findings included:

• 35 instances (30%) of adverts which indicated an interest rate or figures relating to the cost of credit but did not include all the standard information by means of a representative example in a clear, concise and prominent way as required by the Consumer Credit Directive;
• of the 27 websites designed for smartphones, the suspected infringement rate was 12 out of 27 (44%), higher than the average in the mini-sweep (36%). In most instances, the suspected irregularity flagged related to the standard information in advertising (in 10 out of 12 cases);
• on 29 out of the 85 (34%) creditor websites checked, it was unclear from the information provided how the creditworthiness assessment is performed, including what personal data is used for that purpose and the possible use of machine learning;
• in 8 out of the 17 products identified as short-term high cost, the website/advert was flagged for further investigation for potential irregularities. In the vast majority of these cases, this was because the standard information required for advertising was not presented by means of a representative example in a clear, concise and prominent way; and
• in cases where, in light of the Covid-19 pandemic extraordinary measures relating to consumer credit had been adopted by the relevant country, the mini sweep reviewed whether the required information was provided on the website. In 23 out of 36 cases (64%), such information was not provided in a clear and comprehensible manner. However, in most of these cases (16 out of 23, nearly 70%) the trader was not required to inform consumers about the measures on its website under national rules and therefore, the website was not flagged.