European Commission

 

Case detail

B a c k

Directive article Article 2 (e)
Article 2 (h)
Article 2 (k)
Article 5 1.
Article 5 2. (a)
National ID Consumer Rights Protection Centre Decision No. E03-PTU-F94-10
Country Latvia Decision date 18/07/2013
Common name Decision type Administrative decision, first degree
Court Patērētāju Tiesību Aizsardzības Centrs (Rīga) Plaintiff(s) AS „4finance”
Court translation Consumer Rights Protection Centre (Riga) Defendant(s) Consumer Rights Protection Centre
Subject professional diligence
Keywords consumer debteconomic behaviourfinancial services

+ Expand all

Headnote

Not assessing potential borrowers’ income is contrary to the requirement of professional diligence and, hence, it should be considered as an unfair commercial practice.

Facts

The plaintiff is a market-leading provider of short-term loans to customers. Prior to granting a credit, the plaintiff evaluated the credit history of potential borrowers. However, the plaintiff did not evaluate the income of potential borrowers, allowing to assess whether the borrowers will be reasonably able to repay the loan.

CRPC considered that such actions put consumers at a disadvantage and that they constituted an unfair commercial practice.

The plaintiff argued that it is necessary to evaluate only the credit history of potential borrowers and if the credit history is good, then it may be assumed that customers have made a well-considered decision and will be able to repay the loan.
 

Legal issue

Is not assessing potential borrowers’ income contrary to the requirement of professional diligence and, hence, should it be considered as an unfair commercial practice? 

Decision

The court held that the plaintiff had undertaken actions which are not compatible with the requirement of professional diligence and which constitute unfair commercial practices.

The court established that the plaintiff is a market-leading provider of short-term loans to consumers and, thus, more experienced than consumers in evaluating consumers’ ability to repay a loan.

By not fully evaluating the consumers’ ability to repay the loan (i.e. not evaluating the income of potential borrowers), the plaintiff created a likelihood that consumers, who do not have sufficient income, might not be able to repay the loan granted. Such commercial practice of the plaintiff had influenced consumers’ economic behavior in a way that a number of consumers had obtained loans, which did not correspond to their actual income level.
 

  URL Decision Decision full text
EN N/A
LV http://www.ptac.gov.lv/upload/leemums_4finance.pdf

Result

The court obliged the plaintiff to discontinue the unfair commercial practice. In order to comply with this request, in every case before granting a credit the plaintiff must obtain information about the income of a potential borrower.

The plaintiff was penalized for committing an unfair commercial practice.
 

Additional information

Date Description URL
There is no events for this case.

Related case(s)

National ID Common Name Subject Country Link type
There is no related cases for this case.

Legal Literature

Title Author
There is no Legal Literature for this case.