New obligations for e-commerce sellers from October

The Consumer Protection Act is changing at the start of October. This will mean new obligations for business owners who sell online.

Amendments to the Consumer Protection Act come into force on 1 October.

From the start of October, an online store cannot offer consumers credit or other deferred payment options as the primary payment methods.

“The purpose of the amendment is to steer consumers towards primarily using other payment methods than ones where they have to pay later. The aim is to reduce consumers’ indebtedness,” says Sanna Lempiäinen, a specialist at Suomen Yrittäjät, the Finnish SME association.

If you sell online, from the start of October you have to offer payment methods to consumers in the following order:

1. Payment methods which do not involve applying for or using a credit facility or other deferred payment. Permitted payment methods include online banking payments, debit or Visa Electron cards and culture and sport vouchers.

2. Payment methods which may include a credit facility or other type of deferred payment. These include combined debit/credit cards and payment applications such as MobilePay, which the consumer can choose to link to either a debit or a credit card.

3. Payment methods which mean applying for credit, using credit or deferring payment in another way, such as signing a credit agreement, using a charge or credit card, or cash on delivery.

It will also be forbidden to show any payment method as the default method in an online store, not even on the basis of a client’s previous purchase. This means the consumer will have to choose their payment method separately for each purpose.

Increased obligation to authenticate

From the start of October, online merchants will have to verify the product or service consumer’s identity using strong electronic authentication at the online checkout whenever the consumer chooses a payment method which means deferred payment, such as an invoice or hire-purchase. The aim of the regulation is to minimize abuses and crime and the resulting damages.

If, however, the consumer chooses a payment method such as a payment card or other means of payment, that is, a payment method pursuant to the Payment Services Act, the regulations on strong authentication of that Act for identifying the customer will continue to apply as they have until now.

An exception to this obligation to use strong authentication is when the consumer agrees to pay the sale price when they receive the goods, such as with cash on delivery or in cash when picking them up in store or having them delivered to their home. Another exception is when an agreed service is delivered in a non-electronic way and the provider of the deferred payment provides the service themselves. Examples of these are party or cleaning services which the service provider bills for afterwards.

More specific consumer credit marketing

More precise attention must be paid to consumer credit marketing in future. The regulation on consumer credit marketing will, from the start of October, become more specific, particularly concerning the type of marketing that can be considered contrary to good lending practice.

In future, the following types of marketing will specifically be considered contrary to good lending practice: downplaying the seriousness of borrowing; showing the borrowing as advancing the consumer’s social success or approval; targeting marketing at consumers with payment default records; and combining the use of credit with gambling.

Credit may not be marketed using terms that make the costs of the credit greater than the principal being borrowed. This means that from the start of October, credit may not be marketed through very low monthly repayments or long repayment terms.

The credit ceiling on consumer credit will drop from the current 20% to 15% from October. Under the new regulation, however, a business owner can continue to add 15% to the reference interest rate pursuant to the Interest Act. The contractual interest rate on the credit cannot exceed 20%, however, if the reference interest rate exceeds five per cent. The aim of the amendment is to reduce consumers’ excess indebtedness and make the pricing of large loans and loans with long repayment schedules more reasonable.

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