Christmas is one of the few occasions during the year when consumers make an unusually large number of higher-than-normal purchases. Many of them take out credits or loans during this period to bring joy to their loved ones. Advertisements for both involve an additional information obligation towards consumers.
Financial products are often advertised in superlatives such as: "the cheapest", "the fastest" or - in relation to the instalments: "0%". The use of such terms in advertising is not prohibited, however their safe use depends on many factors. The President of the Office of Competition and Consumer Protection (OCCP) may consider actions aimed at misleading consumers or failing to meet the information obligations towards consumers as violating the collective consumers interests.
For example, the OCCP finds that an ad concerning a loan which promises that the consumer will be granted a loan within 15 minutes, without clarification that the time is counted from the moment the application for a loan is approved, constitutes an unfair market practice. If an entity offering a credit or a loan, including an intermediary (broker), does not set forth in an advertisement, all the costs related to conclusion of a contract, or discloses such costs but in a way suggesting that these costs are lower than they are in reality, the OCCP may initiate proceedings against the entity and impose a financial penalty. The amount of the penalty depends, among other things, on the severity of the violation and may amount up to 10% of the entrepreneur's revenue in the year preceding the issuance of the decision.
Must have in advertising for credits and loans
The Consumer Credit Act applies to both credit and loans. It requires the creditor or lender to provide in an ad information on the cost of credit in a clear, comprehensible and visible manner. It is mandatory to provide information on:
- the interest rate on the credit including information on whether the rate is fixed, variable or both rates apply;
- total amount of credit;
- the annual percentage rate of charge (APR).
Additionally, where applicable, the consumer must be informed on: the duration of the agreement, the total amount to be paid by the consumer and the amount of separate instalments, the price of the good or service and the amount of all advances - in case of a credit agreement providing for deferred payment.
Transparency of information
Information on the total cost of the credit/loan must be given to the consumer as a representative example in a manner at least as conspicuous, legible and audible as data on the cost of consumer credit.
Due to a large volume of mandatory information, it may be difficult to include it in, for example, an audiovisual or radio advertisement. It should be easier in the case of graphic advertising, e.g. in the press or on billboards, but even in such a case certain problems may occur. Even if they are technically feasible, their visibility or readability may be problematic, and, in the case of radio advertisements, there may be a problem with comprehensibility and assimilation of the information by the consumer when the text is read out by a speaker very quickly. Assessing whether collective interests of consumers have been violated is a case-by-case assessment and often involves moving through "shades of grey".
Contrary to regulations on e.g. labelling and packaging of tobacco products, Polish regulations do not indicate a minimum threshold of space (or time - in the case of radio advertising) to be occupied by information on the actual cost of credit/loans as compared to the total advertising space in order to objectively meet the "information" requirement. Most often, information about the actual costs of financial products is placed at the bottom or on the side of the graphic, in small print. The assessment whether the collective interests of consumers have not been infringed and the information has been provided in an unambiguous, understandable and visible way is each time subject to individual evaluation.
If the information provided to consumers in advertisements does not comply with the law, the entity offering a loan or a credit may be charged with accusation of violating the collective interests of consumers or engaging in unfair market practices. Consequently, it will be required to pay a fine and, in some cases, to reimburse consumers for interest improperly charged.