For the first time, the Commission for Consumer Protection carried out an inspection of absolutely all non-bank financial institutions in Bulgaria and their contracts.
A wide range of unequal clauses have been established in the contracts and general conditions of companies providing quick loans to individuals.
Checks have shown that many of these contracts include terms that violate consumer rights by creating financial burdens and restrictions on them.
The Consumer Protection Commission also undertook inspections to detect unfair commercial practices among fast credit companies, based on pre-prepared and approved criteria by the CPC.
In the framework of this initiative, 20 companies were inspected, and a number of unfair practices were identified, including additional fees for express credit approval, penalties for delays exceeding the legal interest rates, and automatic declaration of early demandability of the loan with minimal delays in the payments, indicated by the KZP.
For each of these practices, the CPC issues prohibition orders with preliminary execution to protect the rights of consumers and the public interest affected.
Main unfair clauses found include:
1. Fees and commissions – clauses obliging users to pay additional fees for priority processing of requests, administration, risk assessment and others, without clear justification and transparency.
2. Arrears – clauses providing for high penalties or fees for late payments, often exceeding legal limits.
3. Early demandability – conditions allowing the creditor to request early repayment of the entire loan in case of minor defaults by the consumer, including minor delays. 4. Collateral and promissory notes – clauses requiring the provision of a promissory note that remains in effect even after the loan has been fully repaid, or other security mechanisms that go beyond what is necessary. 5. Interest rates and currency risk – conditions that allow changes in interest rates and currency values on loans without prior notice to users.Recommendations and requirements of the CCP
The Commission gives 14 days to the companies providing fast loans to review and adjust the contracts and general conditions to remove any unfair clauses that violate the rights of consumers. Companies must provide corrected versions of contracts or declare in writing that their contracts do not contain unfair terms.
Companies that do not comply with the CCP's recommendations within the specified time frame will be subject to class actions. With these measures, KZP aims to protect the rights of affected consumers and remove illegal terms from contracts in the sector.
CPC continues to work to protect consumer rights
The Commission will continue to monitor the fast loans sector and take the necessary measures to protect consumers from unfair commercial practices.