Unfair Commercial Practices Directive, Chapter 1, Article 2, (d) Unfair Commercial Practices Directive, Chapter 2, Section 1, Article 6, 1.

The criteria determining what is an unfair commercial practice in accordance with the Directive 2005/29 are such as to permit the conclusion that, if a supplier quotes in the contract a lower annual percentage rate of charge than is in fact the case, it is possible to regard that step by the supplier towards the consumer as an unfair commercial practice.

The plaintiffs had concluded a consumer loan contract with the defendant, a non-bank establishment which grants consumer loans on the basis of standard contracts. The plaintiffs had loaned an amount of approx. 5000 EUR, which, in accordance with the contract's terms, should be repaid in 32 monthly installments of approximately 199 EUR and a 33rd instalment in the same amount as the loan granted,  the total amount to repay being approximately 11.000 EUR.

In the agreement, it was stipulated that the annual percentage rate of charge amounted to 48.63%, whereas the referring judge had established that it was in fact 58.76%, since the defendant did not include in its calculation some charges relating to the loan granted.

The referring judge was of the opinion that the outcome of the case depended on an interpretation of the relevant provisions of European Union law, including the interpretation of the Directive 2005/29 on unfair commercial practices.  

Are the criteria determining what is an unfair commercial practice in accordance with Directive 2005/29 such as to permit the conclusion that, if a supplier quotes in the contract a lower annual percentage rate of charge than is in fact the case, it is possible to regard that step by the supplier towards the consumer as an unfair commercial practice?

The Court first reiterates the broad definition of the notion "commercial practice" in Article 2(d) of the Directive.

The Court subsequently refers to the provisions on misleading practices which refers to commercial practices containing false information regarding the elements listed in the Directive which amongst others include the price or the manner in which the price is calculated.

As a result, so the Court decides, a commercial practice which consists in indicating in a credit agreement an annual percentage rate of charge lower than the real rate, constitutes false information, and, in so far as such false indication is likely to cause the average consumer to take a transactional decision that he would not have taken otherwise, that false information must be regarded as a misleading commercial practice.

 The Court further rules that the finding that a commercial practice is unfair has no direct effect on the assessment of the validity of the credit agreement concluded, from the point of view the Unfair Contract Terms Directive. However, a finding that a commercial practice is unfair is one element among others on which the competent court may base its assessment of the unfairness of contractual terms.  

 

URL: http://eur-lex.europa.eu/LexUriServ/LexUriServ.do?uri=CELEX:62010CJ0453:EN:HTML

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The plaintiff's arguments were followed.