Buy Now, Pay Later: ECJ Sets Rules for Transparent Advertising
Consumers demand clear details about 'Buy Now, Pay Later' plans, ECJ decrees - European Court of Justice Advocates Transparent Details for Consumers in Advertising Accounts
In a recent case, Bonprix, a German clothing retailer, faced a legal battle over a "convenient buy now, pay later" advertising campaign. The Consumer Center believed this promotion was misleading because potential buyers didn't know that this payment option required a creditworthiness check.
Although the case initially went in Bonprix's favor, the Federal Court of Justice (BGH) in Karlsruhe appealed to the European Court of Justice (ECJ) for guidance on the definition of a "sales promotion offer" under EU law. If Bonprix's claim qualified as an offer, they would've had to disclose the creditworthiness check requirement.
The ECJ did not rule on Bonprix's specific advertising but did establish that referencing a particular payment method constitutes a sales promotion offer if it provides customers with an advantage that may influence their purchasing decision, regardless of whether the benefit is financial or merely convenient. The ECJ explained that the ability to pay on invoice offers customers more time, a small, subtle financial advantage.
Furthermore, customers would not be required to apply for a refund if they chose to cancel the contract, potentially serving as an incentive for consumers to opt for this retailer. As a result, such an advertising statement can be classified as a sales promotion offer, and traders must inform customers about the conditions for buying on invoice.
Now it's up to the BGH to decide whether Bonprix's advertising is indeed a sales promotion offer. The BGH will rule on the Consumer Center's appeal, but no decision date has been announced yet.
- ECJ
- Federal Court of Justice
- Consumer Center
- Creditworthiness
- Karlsruhe
- EU
- Luxembourg
- Germany
- Consumer Center Hamburg
According to the EU's regulatory framework on promotions and pricing, a "sales promotion offer" generally implies price reductions or temporary price advantages to consumers. EU law governs practices such as discounts, conditional offers, and combined or linked offers to ensure truthful and non-misleading advertising. When it comes to Buy Now, Pay Later (BNPL) advertising, the ECJ emphasizes transparency and fairness in the communication of payment terms, financial incentives, and any linked promotional offers to prevent consumer deception.
[1] European Commission, "Luxembourg: Price Indication Directive"; European Parliament and Council, "Directive 2005/29/EC of the European Parliament and of the Council of 11 May 2005 concerning unfair business-to-consumer commercial practices in the internal market"
- To maintain compliance with EU regulations, vocational training providers in EC countries should ensure that their advertising for Buy Now, Pay Later financing options for vocational training programs are transparent and clearly disclose any creditworthiness checks or financial conditions.
- Businesses offering Buy Now, Pay Later (BNPL) financing for vocational training in EC countries should be aware of the EU's stipulations on truthful and non-misleading advertising, particularly the need for full disclosure of all payment terms, financial incentives, and linked promotional offers to avoid consumer deception.
