"Buy Now, Pay Later": EU Court Craves Transparency in Advertising
Consumers demand transparent details regarding 'Buy Now Pay Later' payment options, EU Court of Justice insists - Advertisement Account: ECJ Advocates Transparent Details for Consumers' Understanding
In the final rush of shopping sprees back in December 2021, Bonprix dangled the tempting 'buy now, pay later' option in their advertisements. But the Consumer Center noticed a tricky trap - potential buyers couldn't tell this payment method was contingent upon a creditworthiness check. The Center took them to court, aiming to ban Bonprix from using this claim.
However, their initial plea fell on deaf ears. The case escalated to the Federal Court of Justice (BGH) in Karlsruhe, which stayed the proceedings and threw a question at the European Court of Justice (ECJ) in Luxembourg. Thequery was simple yet vital: To clarify the term "sales promotion offer" under EU law, as determining whether Bonprix's claim falls under this category could be pivotal. The BGH suspected Bonprix may have needed to reveal the creditworthiness requirement.
The ECJ, however, didn't address Bonprix's specific advertising. Instead, they issued a general ruling that could reshape online purchasing. A reference to a payment method constitutes a sales promotion offer if it offers buyers an advantage that might sway their purchase decision - whether it's financial or just practical, like being able to pay later. This slight convenience yields a small financial advantage, the ECJ explained, as it grants buyers more time. Additionally, buyers won't have to request a refund if they change their minds, providing an incentive to opt for such providers.
In essence, advertising claims promoting flexible payment methods can be considered a sales promotion offer. Consequently, traders must disclose the terms and conditions for buying on credit to their customers. The final say on the matter concerning Bonprix's practitioneer centers' appeal lies with the BGH, who have yet to announce a decision date in Karlsruhe.
- ECJ
- Federal Court of Justice
- Consumer Center
- Creditworthiness
- Karlsruhe
- EU
- Luxembourg
- Consumer Protection Directive
- Unfair Commercial Practices Directive
- Distance Selling Directive
- Digital Content Directive
- Digital Services Act
- General Data Protection Regulation (GDPR)
Insights: The EU doesn't have a tailor-made legal definition of a "sales promotion offer" for 'Buy Now, Pay Later' advertising as per the jurisdiction of the European Court of Justice (ECJ). Instead, the EU's consumer protection and sales promotion practices are regulated by several directives and regulations. The Consumer Protection Directive and the Unfair Commercial Practices Directive ensure fair and transparent advertising practices, including sales promotions. Simultaneously, the Distance Selling Directive, the Digital Content Directive, and the Digital Services Act emphasize transparency and fairness in online transactions, including clear information about payment terms and conditions. Lastly, the General Data Protection Regulation (GDPR) governs data handling in advertising practices, although it's not directly related to sales promotions. For specific guidance on BNPL advertising, retailers should consult national laws and regulations and seek legal advice to adhere to EU consumer protection directives and national implementations.
- Following the ruling by the European Court of Justice (ECJ), businesses operating within EC countries must disclose the terms and conditions for buying on credit when advertising flexible payment options, such as 'Buy Now, Pay Later'.
- As per the ECJ's recent decision, any advertising claims promoting flexible payment methods could be considered a sales promotion offer, requiring businesses to provide clear information about payment terms and conditions to maintain transparency in online purchasing practices across the EU.
