Small credit through online platforms

Abstract

ABSTRACT Small credit through online platforms bears the risk of excessive interest rates, high hidden costs and ruthless debt collection practices. At the EU level, they are partly unregulated, whereas Member States have taken specific measures to manage the risk or avail of general concepts of law that can be applied to small credit. Using specific credit offers for the sake of illustration, this article flags up relevant problems with small credit and current approaches to solve them. It also considers the current reform of the Consumer Credit Directive, which is expected to be adopted in 2023, and its potential effect on small credit providers. It concludes that substantive law already offers reasonable protection, and it will improve with the new Consumer Credit Directive, although there is much legal uncertainty in many usury laws. There is, however, a serious enforcement problem that allows dubious lenders to apply unlawful practices.