Order on Good Conduct for Consumer Credit Business

Order on Good Conduct for Consumer Credit Business 1)

Pursuant to Section 7, Paragraph 2, and Section 30, Paragraph 7, of Act No. 450 of 24 April 2019 on Consumer Credit Business, the following is enacted:

Chapter 1 Scope and Definitions

Section 1. This Order applies to consumer credit businesses that have permission to conduct business, cf. Section 3 of the Act on Consumer Credit Business.

Section 2. In this Order and pursuant to Section 2, Nos. 1, 4, 9, and 10, of the Act on Marketing, the following terms are understood as:

1. Consumer: A natural or legal person who, in connection with transactions covered by the Act on Consumer Credit Business, primarily acts outside their trade or profession.

2. Commercial Practice: An act, omission, conduct, presentation, or commercial communication, including advertising and marketing, carried out by a trader directly related to the promotion, sale, or provision of a product to consumers.

3. Good Commercial Practice: The standard of special skill and care which a trader may reasonably be expected to exercise towards consumers, which is commensurate with honest market practice and the general principle of good faith in the trader's field of activity. The concept covers the same ground as the concept of "professional diligence" used in 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.

4. Call to Purchase: A commercial communication in which the product's characteristics and price are disclosed in a manner appropriate to the commercial communication medium used, enabling the consumer to make a purchase.

Chapter 2 General Provisions on Good Conduct

Section 3. A consumer credit business must act honestly and loyally towards its customers, cf. however Paragraph 2.

Paragraph 2. If the commercial practice in question affects the consumer's economic interests, Chapter 3 applies instead of Paragraph 1. If the commercial practice in question simultaneously contravenes considerations not intended to protect the consumer's economic interests, including considerations of taste and decency, safety and health, or other considerations, or if the commercial practice in question is regulated by contract law, Paragraph 1 applies alongside Chapter 3.

Chapter 3 Commercial Practices Towards Consumers

Good Commercial Practice

Section 4. A consumer credit business must exercise good commercial practice in its commercial practices towards consumers.

Misleading Actions

Section 5. A consumer credit business's commercial practice must not contain false information or, by reason of its presentation or in any other way, mislead or be likely to mislead the average consumer, even if the information is factually correct.

Paragraph 2. Misleading under Paragraph 1 may relate to one or more of the following elements:

1. The existence or nature of the product.
2. The main characteristics of the product.
3. The extent of the consumer credit business's obligations, the reason for the commercial practice in question, and the nature of the sales process used.
4. Declarations or symbols with direct or indirect endorsement or approval of the consumer credit business or its products.
5. The price, the manner in which the price is calculated, or a special financial advantage.
6. Need for after-sales service, spare parts, replacement, or repair.
7. Characteristics and rights of the consumer credit business or its intermediary.
8. The consumer's rights.
9. The consumer credit business's compliance with a code of conduct which it claims to be bound by.
10. Confusion with a competitor's product, trademark, or business name.

Misleading Omissions, Including Calls to Purchase and Hidden Advertising

Section 6. A consumer credit business's commercial practice must not mislead by omitting or hiding material information or by presenting material information in a unclear, unintelligible, ambiguous, or inappropriate manner.

Paragraph 2. In calls to purchase, the following information is considered material:

1. The product's main characteristics to an extent corresponding to the medium and the product.
2. The consumer credit business's physical address and name, and, if another trader acts on its behalf, the physical address and name of that trader.
3. Matters relating to payment, delivery, and performance of the agreement, to the extent that these matters deviate from what is customary in the industry.
4. The consumer credit business's procedure in connection with complaint handling, to the extent that it deviates from what is customary in the industry.
5. Right of withdrawal, right of cancellation, or right of return, if the consumer has such a right.
6. The price including VAT and duties.
7. Additional costs relating to freight, delivery, or postage, to the extent that such costs are charged.

Paragraph 3. When the nature of the product means that the price cannot reasonably be calculated in advance, the consumer credit business must disclose how the price is calculated. When costs relating to freight, delivery, or postage cannot reasonably be calculated in advance, it must be disclosed that such costs may occur.

Paragraph 4. The consumer credit business must clearly disclose the commercial intent of any form of commercial practice, including advertising. Section 8 applies correspondingly.

Paragraph 5. In assessing whether information has been omitted under Paragraphs 1 and 4, account shall be taken of whether the consumer credit business uses a medium that only provides limited space or time to convey the information, and what measures the consumer credit business has taken, if any, to make the information available to consumers in other ways.

Aggressive Commercial Practice

Section 7. The consumer credit business must not use harassment, coercion, including the use of physical force, or undue influence in its commercial practice that is likely to significantly impair the consumer's freedom of choice in connection with a product.

Significant Distortion of Economic Behaviour

Section 8. It is a condition that the commercial practice in question significantly distorts or is likely to significantly distort the economic behaviour of the average consumer, or, if the commercial practice in question is directed at a specific group of consumers, of an average member of that group, for there to be a breach of Sections 4-7.

Paragraph 2. A commercial practice which the consumer credit business may reasonably be presumed to only significantly distort the economic behaviour of a clearly identifiable group of consumers who are particularly vulnerable to the practice or the product in question, including due to mental or physical infirmity, age, or credulity, shall be assessed from the perspective of an average member of that group.

Forms of Commercial Practice Always Considered Misleading or Aggressive

Section 9. Regardless of whether there is a breach of Sections 5-7, a consumer credit business must not use the forms of commercial practice listed in Annex 1.

Marketing of Credit Agreements

Section 10. Any marketing of credit agreements to consumers that discloses an interest rate or figures relating to the costs associated with consumer credit must contain the following standard information:

1. The annual percentage rate of charge (APRC), including whether it is fixed or variable or both, and information on costs included in the consumer's total cost of credit.
2. The total credit amount.
3. The annual percentage rate of charge (APRC) as calculated according to the Act on Credit Agreements.
4. The duration of the credit agreement.
5. The cash price and the amount of any advance payment in the case of credit in the form of deferred payment for a specific good or service.
6. The total amount to be paid by the consumer and the amount of the instalments.

Paragraph 2. The standard information, cf. Paragraph 1, must be disclosed clearly, concisely, and prominently using a representative example.

Paragraph 3. If the conclusion of an agreement for an ancillary service in connection with the credit agreement, including insurance, is mandatory to obtain the credit or to obtain the credit on the advertised terms and conditions, and the costs of such an agreement cannot be calculated in advance, the obligation to conclude this agreement must also be disclosed clearly, concisely, and prominently together with the annual percentage rate of charge (APRC).

Chapter 4 Conclusion and Amendment of Credit Agreements

Section 11. A consumer credit business must conclude or confirm all material agreements with its customers in paper format or on another durable medium. An agreement must contain a description of the parties' main rights and obligations, as well as the services covered by the agreement.

Paragraph 2. Terms included in the agreement may be stated by reference to separate documents, including the consumer credit business's general business terms.

Paragraph 3. If a consumer credit business terminates an agreement entered into with a customer, the termination must be objectively justified and be made in paper format or on another durable medium.

Chapter 5 Supervisory and Penal Provisions

Section 12. The Danish Financial Supervisory Authority may issue orders to correct matters that are in conflict with the provisions of this Order and Annex 1.

Section 13. Breach of Section 5, Paragraph 1, Section 6, Paragraphs 1, 3, and 4, Section 7, and Sections 9-10 is punishable by fine, unless a higher penalty is incurred under other legislation.

Paragraph 2. Whoever fails to comply with an order under Section 12 is punishable by fine.

Paragraph 3. Companies and other legal persons may be subject to criminal liability according to the rules in Chapter 5 of the Criminal Code.

Chapter 6 Entry into Force

Section 14. This Order enters into force on 1 November 2019.

Ministry of Industry, Business and Financial Affairs, 10 October 2019

SIMON KOLLERUP / Hans Høj

1. The Order contains provisions implementing 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 and amending Council Directive 84/450/EEC, Directives 97/7/EC, 98/27/EC and 2002/65/EC of the European Parliament and of the Council and Regulation (EC) No 2006/2004 of the European Parliament and of the Council, Official Journal of the European Union 2005, No L 149, page 22.

Official Gazette A 2019 Published on 12 October 2019 10 October 2019. No. 1035. Ministry of Industry, Business and Financial Affairs, Danish Financial Supervisory Authority, ref. no. 1952-0014 CQ000947

Annex 1 Specific Forms of Commercial Practice Always Considered Misleading or Aggressive

Misleading Commercial Practice

1. The trader claims to have signed a code of conduct when this is not the case.
2. The trader displays a quality certification, quality mark, or equivalent without having obtained the necessary permission.
3. The trader claims that a code of conduct is endorsed by a public authority or another authority when this is not the case.
4. The trader claims that a trader (including their commercial practice) or a product has been endorsed or permitted by a public or private body when this is not the case, or makes such a claim without fulfilling the conditions for endorsement or permission.
5. The trader invites consumers to purchase products at a specified price without making it clear that there may be reasonable grounds to believe that he will not be able to supply or have another trader supply the products or equivalent products at that price within a period and in a quantity that is reasonable in relation to the product, the extent of the advertising for the product, and the price quoted (bait advertising).
6. The trader invites consumers to purchase products at a specified price, but refuses to show the advertised product to consumers, refuses to take orders for it, or refuses to deliver it within a reasonable time, or displays a defective version of it, because he intends to promote another product (bait and switch).
7. It is stated, contrary to the truth, that the product will only be available for a very limited period, or that it will only be available on certain conditions for a very limited period, in order to induce an immediate decision and deprive consumers of sufficient opportunity or time to make an informed decision.
8. The trader undertakes to provide after-sales service to a consumer with whom he has communicated prior to the transaction in a language that is not an official language in the Member State where the trader is established, but provides such service only in another language without having made this clear to the consumer before the consumer became bound by the transaction.
9. It is stated, or given the impression, that a product can be sold legally when this is not the case.
10. Rights which the consumer has under the law are presented as a distinctive feature of the trader's offer.
11. Editorial content in the media is used to promote a product where a trader has paid for such advertising, without this being clearly identifiable from the content or from images or audio that can be clearly identified by the consumer. This does not affect Directive 89/552/EEC as codified by Directive 2010/13/EU.
12. A factually incorrect statement is made regarding the nature and extent of the risk to the consumer's or their family's personal safety if the consumer does not purchase the product.
13. A product resembling another product manufactured by a specific manufacturer is promoted in such a way that the consumer is deliberately led to believe that the product is manufactured by the same manufacturer, when this is not the case.
14. The establishment, operation, or promotion of a promotional pyramid scheme where the consumer pays a consideration and in return is promised compensation that is mainly dependent on whether he has introduced other persons into the scheme and to a lesser extent on the sale or consumption of products.
15. It is claimed that the trader's business is closing down or moving to other premises when this is not the case.
16. It is claimed that products can make it easier to win at gambling.
17. It is stated, contrary to the truth, that a product can cure illnesses, malfunctions, or malformations.
18. Factually incorrect information is given about market conditions or the possibility of finding the product with the aim of inducing the consumer to acquire the product on worse terms than normal market conditions.
19. It is claimed as part of the commercial practice that a competition or sales promotion with prizes is being held, but the mentioned prizes or other reasonably equivalent prizes are not awarded.
20. A product is described as "free", "without charge", "no payment required", or similar, even though the consumer has to pay anything other than the unavoidable costs associated with responding to the commercial practice in question, as well as collection or payment for delivery of the product.
21. The marketing material includes an invoice or similar document inviting payment, giving the consumer the impression that he has already ordered the product being marketed, even though this is not the case.
22. The trader, contrary to the truth, claims or gives the impression that he is not acting in the course of his trade, business, craft, or profession, or he, contrary to the truth, presents himself as a consumer.
23. The false impression is created that after-sales service in connection with the product is available in a Member State other than the one where the product is sold.

Aggressive Commercial Practice

24. The consumer is led to believe that he cannot leave the premises until a contract has been concluded.
25. Personal visits are made to the consumer's home without respecting the consumer's wish that the trader leave the premises or stay away, with the exception of visits with the aim of enforcing a contractual obligation under circumstances and to an extent justified under national legislation.
26. Persistent and unwanted contact is made by telephone, not covered by the prohibition in Section 4 of the Consumer Contracts Act, or by telefax, email, or other distance communication media, with the exception of contact with the aim of enforcing a contractual obligation under circumstances and to an extent justified under national legislation.
27. The trader requires a consumer, who wishes to claim under an insurance policy, to produce documents that cannot reasonably be considered relevant in relation to the validity of the claim, or systematically fails to respond to correspondence regarding the matter, with the intention of discouraging the consumer from exercising his contractual rights.
28. An advertisement directly urges children to buy or to persuade their parents or other adults to buy the products to which the advertisement relates. This provision does not affect Article 9, Paragraph 1, letter g, of Directive 2010/13/EU on audiovisual media services.
29. Immediate or subsequent payment for, or return or storage of, products delivered by the trader is demanded, even though the consumer has not requested this, with the exception of replacement products delivered in accordance with Article 7, Paragraph 3, of Directive 97/7/EC (delivery without prior request).
30. The consumer is explicitly informed that if he does not purchase the product or service, the trader's job or livelihood will be threatened.
31. The false impression is created that the consumer has already won, will win, or by performing a specific action will win a prize or other equivalent good, even though the fact is that either no prize or other equivalent good exists, or that the action to be performed to redeem the prize or other equivalent good involves the consumer paying a sum of money or incurring costs in some other way.