Paying Later With Ease: ECJ Clarifies Advertising Requirements for "Buy Now, Pay Later"
Buy Now on Credit: ECJ Insists on Transparent Details for Consumers - European Court of Justice Demands Transparent Information for Consumers in Advertising
Got your eye on a snazzy new outfit from Bonprix but hesitated due to the "pay later" option? You're not alone. The German Consumer Protection Center found this advertising tactic misleading, and it landed Bonprix in court.
The case made its way to the Federal Court of Justice (BGH) in Karlsruhe, which asked the European Court of Justice (ECJ) for a clear definition of "sales promotion offer" under EU law. The decision on whether Bonprix's claim qualifies as such is crucial, as the BGH believes that if it does, the company would have to disclose a creditworthiness check.
The ECJ hasn't ruled on Bonprix's specific case yet, but it has shed light on what constitutes a sales promotion offer for payment methods like "Buy Now, Pay Later." according to the ECJ, a reference to a specific payment method, like being able to pay on invoice, can be classified as a sales promotion offer if it gives customers an advantage that impacts their purchasing decision, whether financially or conveniently. The advantage of being able to pay later gives customers more time, which is a small financial advantage, the ECJ explained. Additionally, customers are not obligated to apply for a refund if they decide against the purchase, which could incentivize customers to choose this provider.
So, if a trader wants to advertise with a payment method like "Buy Now, Pay Later," they must inform customers about the conditions for buying on invoice.
As for Bonprix's case, the BGH will now rule on the German consumer protection center's appeal, but a decision date has not yet been set.
EU's Focus on Transparency in Financial Services:
The EU is intensifying its efforts to protect consumers in the realm of financial services. While specific regulations for "Buy Now, Pay Later" services are still evolving, the EU's emphasis on consumer protection and transparency could extend to these services. However, at present, there's no detailed guidance on advertising requirements for "Buy Now, Pay Later" from the ECJ or other EU regulatory bodies. For the most accurate and up-to-date information, it would be wise to consult legal experts specializing in consumer protection and financial services within the EU.
EC countries should consider implementing vocational training programs to equip businesses with the necessary skills to comply with the EU's emphasis on transparency in financial services, such as in advertising requirements for "Buy Now, Pay Later" services. The clarity provided by the ECJ on what constitutes a sales promotion offer for payment methods like "Buy Now, Pay Later" can serve as a foundation for such training, ensuring businesses understand the importance of informing customers about the conditions for buying on invoice.
