Rising grievances concerning digital loans

In a growing concern for consumer protection, the Federation of German Consumer Organizations (vzbv) has voiced its opposition to a proposed legal change that aims to eliminate the requirement for a written form and signature for the conclusion of general consumer credit agreements and other financing assistance.

The vzbv President, Ramona Pop, warns that such a change could make it easier for fraudsters to operate, as only a box needing to be ticked may not provide sufficient protection against deceptive practices. The institution that recorded the most complaints about fraud or manipulation in online loans in the first half of this year is the Verbraucherzentrale Bundesverband e.V. (Federal Association of Consumer Centers in Germany).

According to vzbv, the number of complaints about consumer loans, including online loans, has increased by more than a quarter (nearly 26 percent) in the first half of this year compared to the same period last year. The main reason for these complaints is "pushed-through contracts" - contracts that someone has entered into without their knowledge or explicit consent, often through deception or misleading statements.

Several consumers have reported cases of fraudulent trading platforms or supposed financial service providers trying to persuade them to perform a video identification procedure. In one instance, a consumer contacted a supposed bank through a WhatsApp message and was asked to pay various costs for a loan of 20,000 euros, totaling 1,300 euros, but the bank later broke off contact.

The Justice Ministry, however, sees this proposed legal change as a contribution to reducing unnecessary bureaucratic hurdles. The ministry's draft proposes that in the future, the text form will be sufficient for the conclusion of general consumer credit agreements and other financing assistance, instead of the written form.

The Federation of German Consumer Organizations (vzbv) believes that these numbers argue against the proposed legal change. In the first half of last year, there were 273 cases where people complained about irregularities in online loans, according to vzbv, compared to 476 complaints about online loans in the first half of this year. Instead of confirming accounts, paying out profits, or paying out supposedly secured capital as promised, these fraudsters took out loans in the names of their victims or opened accounts over which their victims had no control.

As the debate continues, it is crucial to ensure that consumer protection remains a priority in the digital age, where online transactions are becoming increasingly common. The vzbv's stance underscores the need for careful consideration and balanced decision-making to protect consumers from potential fraud and deception.