Shoppers beware: Consumer Centre issues caution on 'Buy now, pay later' schemes
In a bid to safeguard consumers from potential over-indebtedness, the German government is moving towards stricter regulations for "Buy Now, Pay Later" (BNPL) loans, following concerns raised by the Federation of German Consumer Organizations (VZBV).
The VZBV, in expressing their concerns, highlighted the risk of consumers accumulating debt due to the lack of stringent credit assessments for BNPL products under previous regulations[1]. In response, Germany is aligning its regulations with the revised EU Consumer Credit Directive, aiming to enforce stricter creditworthiness checks and mandate relief measures for consumers facing financial difficulties[1][2].
This shift will ensure that BNPL loans fall under consumer credit law, thereby ending their previous regulatory exemptions and offering better protection to consumers against the accumulation of unsustainable debt[1][2].
The draft, which supports people in financial distress and includes provisions for protection against usurious interest rates, has received praise from the VZBV[1][2]. However, the organisation has criticised a lack of transparency regarding rejected credit wishes in the draft[1].
VZBV President Ramona Pop has also voiced concerns about potential impulsive credit decisions that could financially burden consumers while shopping online[1]. To mitigate this risk, the VZBV has called for a signature to still be required for online consumer loans[1].
The plans for online consumer loans need the approval of the Bundestag before they can be implemented[1]. If approved, these changes will mark a significant step towards protecting consumers in the digital age, ensuring they make informed decisions and are not burdened with unsustainable debt.
Personal-finance concerns raised by the VZBV have led to Germany's decision to enforce stricter regulations in the business sector, specifically targeting Buy Now, Pay Later (BNPL) loans. The stricter regulations aim to prevent consumers from accumulating debt by implementing stricter creditworthiness checks and mandating relief measures.
