US EU strengthens consumer protection for online loans

20:30  02 december  2022
20:30  02 december  2022 Source:   finanzen.net

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consumers in the EU will in future be better protected when recording debts on the Internet and online purchases on credit. The European Parliament's and the EU countries agreed on the so-called consumer credit directive on Friday.

Bei der Aufnahme von Schulden im Internet sowie bei Online-Käufen werden Verbraucher künftig besser geschützt. © Karl-Josef Hildenbrand/dpa When recording debts on the Internet and online purchases, consumers will be better protected in the future.

In this way, information about loans must be made particularly clear and understandable - for example how much it costs to borrow money. At the same time, it should be better checked whether consumers can actually afford the loan and can pay back later. The aim is to protect households with low income from over -indebtedness and financial difficulties.

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The law extends existing rules for the protection of consumers in debt admission to new forms of credit. Specifically, the rules should apply, for example, for loans under 200 euros and to crowdlending, with an online platform, for example, conveying money from private individuals to other people or companies. Online purchases, in which consumers only pay later, also fall under the new rules.

The MEP Malte Gallee (Greens), who took part in the negotiations, welcomed the agreement. The new guideline improves the protection of consumers in the loan area and makes an important contribution to preventing growing over -indebtedness. The new rules are, for example, that companies would have to find forgiving methods if loans could not be repaid instead of moving directly to court, he said. In addition, it must be clearly explained in the advertising that money also costs money. "What looks like a loan should also be treated like a loan," said Gallee.

In the current crisis, more people - especially in households with low incomes - resorted to consumer loans to cover their daily living costs, commented Peter Norwood from the Finance Watch organization. "I am glad that the EU decision-makers have taken measures to make the consumer credit market safer and fairer in a time."

The agreement must still be formally confirmed by the parliament and the countries, but this is considered a matter of form.

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This is interesting!