Demystifying "Buy Now, Pay Later" Advertising: ECJ Enforces Transparency for Consumer Protection
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Boosting Ads Through 'Buy on Account' - ECJ Reinforces Transparency Requirements - Enhancing Transparency in 'Buy Now Pay Later' Advertising - ECJ Reinforces Clarity
The European Court of Justice (ECJ) has stepped up to safeguard consumers in a hotly debated legal dispute over "Buy Now, Pay Later" advertising. The case centers around how prominently online vendors must highlight a creditworthiness evaluation when promoting a "convenient" Buy Now, Pay Later option.
For "sales promotion offers," EU law sets stringent transparency standards. Such transactions should be easily recognizable under what conditions consumers can access them. The judges in Luxembourg have now provided a comprehensive interpretation of this EU law, making it possible for Buy Now, Pay Later offers to fall under this category, though the final decision on the matter lies with the Federal Court of Justice (BGH).
Bonprix advertised "Convenient Buy Now, Pay Later"
At the heart of the discussion is an advertising statement by the fashion retailer Bonprix, part of the Otto Group. The Hamburg Consumer Center criticized Bonprix's Buy Now, Pay Later offer as misleading because it failed to clearly indicate that a creditworthiness check was still required. The case made its way to the BGH, which sought clarification from the ECJ.
"We're thrilled that the European Court of Justice has categorized Buy Now, Pay Later as a sales promotion offer and believe the Federal Court of Justice will also rule in favor of consumers," declares Julia Rehberg from the Hamburg Consumer Center.
Bonprix maintains that it communicated appropriately in the 2021 case, as a company representative stated. We await the BGH's final decision. "We're also interested in the final resolution of the matter."
Enriching Your Knowledge
- Clear and Comprehensive Information Before Purchase: Online retailers must clearly inform consumers about the exact terms of the Buy Now, Pay Later offer before the purchase is made. This includes disclosing any additional costs, interest rates, payment schedules, and the consequences of non-payment to ensure consumers can make an informed choice.
- Avoidance of Misleading Advertising: Any advertising or promotion of credit or deferred payment offers, like Buy Now, Pay Later, must not be misleading. The retailer must not omit essential information that could affect the consumer's understanding of the financial responsibility involved.
- Disclosure Obligations Extend to All Advertising Channels: Transparency requirements apply across all online advertising media, such as websites and third-party platforms, ensuring consumers receive consistent information regardless of where they see the offer.
- Right of Withdrawal and Consumer Protections: The ECJ emphasizes that consumers must be informed about their statutory rights, including the right to withdraw from the credit agreement and related national laws.
- Balancing Consumer Protection with Market Fairness: These rules aim to create a level playing field where consumers are protected from hidden costs or unclear credit conditions while enabling online retailers to advertise credit offers transparently and fairly.
These interpretations reflect the ECJ's role in enforcing fair commercial practices, ensuring all essential information is disclosed in a clear, accessible, and understandable manner for average consumers. Although specific case law details are not provided, these have become the established framework within which Buy Now, Pay Later advertising is assessed under EU consumer law.
No updates in recent case laws or new EU regulations explicitly targeting Buy Now, Pay Later advertising transparency have emerged beyond these principles. However, broader EU regulations like the Digital Markets Act and the Accessibility Act indirectly influence online digital commerce and transparency, although they don't supersede the stringent transparency requirements established by the ECJ for consumer credit advertising.
In essence, the ECJ demands online retailers to be transparent, clear, and honest in advertising Buy Now, Pay Later offers, ensuring consumers understand their financial responsibilities before committing, thus fulfilling consumer protection regulations under EU law.
- The European Court of Justice (ECJ) has categorized "Buy Now, Pay Later" offers as sales promotion offers, which fall under strict transparency standards set by EU law.
- Online retailers should provide clear and comprehensive information about Buy Now, Pay Later offers before purchase, including any additional costs, interest rates, payment schedules, and consequences of non-payment, to ensure consumers can make informed choices.
