Euro banknotes and coins. Photo: Edijs Pālens/LETAP The Consumer Rights Protection Center (PTAC) has adopted a decision in the case of violation of the collective interests of consumers at the end of 2022, by which SIA “InCredit Group” has been given the legal obligation to end unfair commercial practices, by disguising advertisements intended for the consumer audience as lending advertisements for economic operators , as a result of which a fine of 16,000 euros was applied, PTAC representatives said.
The PTAC evaluated the commercial practices implemented by “InCredit Group” and initiated an administrative case against the company for monitoring compliance with regulatory acts in connection with the distribution of inappropriate credit advertising on the radio, as well as on the websites “Youtube” and “Facebook”, creating the advertisement in such a way as to try to circumvent the ban on credit advertising , and encouraging irresponsible borrowing.
During the examination of the case, PTAC established that the distributed lending advertisements do not meet the requirements of the Law on Protection of Consumer Rights, thereby violating the requirements set out in the Law on Advertising and the Law on the Prohibition of Unfair Commercial Practices.
Although the advertisements of “InCredit Group” indicate that it is an offer for economic operators, in the scenes, visual, audio and textual information depicted in the advertisements, the message addressed to consumers was clearly perceptible, namely home repairs or leisure trips with spouse or children, which are not visible for services related to the economic or professional activity of a legal entity.
Taking into account the fact that the real target audience of the advertisement is consumers, not economic operators, the restrictions of the regulatory acts of credit advertising have been violated, and “InCredit Group”, by distributing such credit advertising, which in general invites any consumer to receive loans for home repairs or travel, can significantly influence the behavior of the average consumer by making a rash decision and leading to unknowing credit obligations, PTAC states.
In addition, PTAC points out that “InCredit Group” advertising was distributed on three different platforms aimed at reaching a wide range of consumers. The audio advertisement was distributed on five different radio stations in Latvian and Russian, thus covering consumers of different ages and social groups.
Taking into account the duration, circumstances and nature of the violation, as well as the extent of the advertisement’s distribution and the fact that the advertisement was created with the aim of circumventing the advertising restrictions of consumer lending, and the fact that “InCredit Group” does not admit its guilt in the implementation of commercial practices inconsistent with professional care, PTAC has concluded that “InCredit The violation committed by “Group” is considered a serious violation, thus the total amount of the fine is set at 16,000 euros.
PTAC calls on credit service providers and credit intermediaries to comply with the restrictions of credit advertising regulations. For a better understanding of these restrictions, PTAC has developed guidelines for appropriate consumer credit advertising, which are available on PTAC’s website in the “Guidelines for merchants” section. On the other hand, PTAC calls on consumers to be responsible and carefully evaluate the need to borrow, as well as their ability to repay the loan, before concluding a credit agreement.
Information from “Firmas.lv” shows that the turnover of the lending company “InCredit Group”, which is part of the “Rietumu bankas” group, was 10.983 million euros in 2021, which is 9.7% less than the year before, while the company’s profit decreased by 13.5 % to 3.14 million euros.
“InCredit Group” was registered in 2010 and its share capital is 500,000 euros. AS “Rietumu banka” owns 51% of the shares of the company, while Arleta Yekimenkova and Olga Orlova each own 24.5%.
