Consumers to be provided with clear information in advertisements implementing 'Buy Now, Pay Later' payment systems, as per ECJ mandate - Marketing on User Account: ECJ Advocates Transparent Details for Consumers
Y'all remember that ol' Bonprix debacle back in December '21? They grabbed headlines with their "convenient buy now, pay later" promo, but the Consumer Center wasn't having it. The issue? Potential buyers couldn't tell that the payment method required a creditworthiness check. The Consumer Center took em to court, but at first, they didn't get lightning to strike.
The case went up the ladder to the Federal Court of Justice in Karlsruhe. Instead of making a call, they asked the EU's Big Cheese, the European Court of Justice (ECJ), for a clear definition of a "sales promotion offer" under EU law. If Bonprix's claim was one of those offers, well, they might've had to drop a few truth-bombs about that creditworthiness check.
The ECJ didn't rule on Bonprix's specific ad, no sir. That's still in the BGH's court, who's gotta decide on the Consumer Center's appeal. No date's been set for that showdown just yet.
Now, what's a sales promotion offer, you ask? EU law says it's any ol' advertising that sweetens the deal by offering extra benefits or incentives to sales. But, it can't mislead, confuse, or hide essential conditions. The ECJ has seen fit to rule that a reference to a specific payment method is a sales promotion offer if it incentivizes the customer, whether financially or just by offering 'em more flexibility. You see, paying later gives customers a teensy tiny financial advantage, and it eliminates the hassle of having to return the goods if they change their minds.
If a statement like that counts as a sales promotion offer, then the trader's gotta lay out the credit terms for 'em, including any eligibility requirements, repayment deadlines, fees, and consequences if those deadlines are missed.
So, we'll wait and see what the BGH decides about Bonprix. In the meantime, EU laws require "Buy Now, Pay Later" advertising to be crystal clear about the conditions. In an effort to strengthen its grip on transparency, the EU's keeping a close eye on the BNPL market, as more and more folks jump on the bandwagon.
- ECJ
- Federal Court of Justice
- Consumer Center
- Creditworthiness
- Karlsruhe
- EU
- Luxembourg
- Germany
- Consumer Center Hamburg
Bob's Your Uncle's Opinionated Take
The EU's stepping up its game when it comes to regulating transparency in advertising for "Buy Now, Pay Later" offers. It's a growing market, and the EU's aiming to protect consumers by applying principles from the ECJ's case law on sales promotions and advertising transparency. In a nutshell, advertisers gotta be honest about the repayment schedule, fees, and eligibility criteria to avoid misleading consumers.
It's clear as day that Buy Now, Pay Later advertisements are considered sales promotion offers in light of the ECJ's definition. Advertisers must make all the fine print easily accessible, or they might end up in hot water for misleading consumers. The EU's firm stance on transparency should serve as a wake-up call to the industry, with stricter consumer protection and data privacy regulations on the horizon. The Digital Markets Act and other EU rules make it quite apparent that the regulators ain't playing when it comes to transparency, fairness, and preventing misleading advertising across digital services.
Legal Insights
- The EU is pushing for transparency in consumer financing and sales promotions, expecting clear disclosure in Buy Now, Pay Later advertising.
- EU law requires that Buy Now, Pay Later advertising must disclose key terms like repayment deadlines, fees, eligibility, and creditworthiness criteria to avoid deception.
- Advertising for Buy Now, Pay Later is considered a sales promotion offer when it promotes upfront purchases with deferred payment, and it must comply with disclosure requirements.
- The Digital Markets Act and EU rules aiming at transparency in digital services are expected to reinforce the transparency requirements in the Buy Now, Pay Later market.
- Given the EU's stance on transparency in consumer financing and sales promotions, it seems that Buy Now, Pay Later advertisers must ensure clear disclosure of essential terms like repayment deadlines, fees, eligibility criteria, and creditworthiness requirements to comply with disclosure rules and avoid potential deception.
- As the Digital Markets Act and other EU rules seek to impose increased transparency, fairness, and prevent misleading advertising across digital services, the Buy Now, Pay Later industry may face stricter regulations to maintain consumer trust and adhere to growing transparency requirements.
