Consumer Credit in Greece
(By INKA Greece)

Consumer Credit

National Legislation

Directives 87/102/EEC 22 December 1986 and 90/88/EOK 22 February 1990 "for the approximation of the laws, regulations and administrative provisions of the Member States concerning consumer credit" were implemented in the Greek legislation through the Ministerial decision No F1-983/1991, published in the government’s Official Gazette No B 172.
The basic concern of this decision is the harmonisation of the directive and the determination of Annual Percentage Rate of Charge, which is the total cost of the credit to the consumer, expressed as an annual percentage of the amount of the provided credit, and calculated according to the mathematic type that is contained in the end of the decision.
This calculation takes place based on the assumption that the credit agreement is valid for the whole time-period agreed, and that the credit institution and the consumer meet all obligations and terms agreed.
Credit agreements must always be in writing.
The consumer must be given a copy of the written agreement. The agreement explicitly defines: the Annual Percentage Rate of Charge, and all the data related to the provision of credit, i.e. description of goods or services that are covered by the agreement, price in cash and price payable according to the credit agreement, the sum of money that might have been paid in advance, a report of the fact that the consumer is eligible to ask for a reduction on the total cost of credit in case of premature refunding, the deadline of cooling-off period for the consumer, where it is forecasted.
The agreements that are operated by credit cards should include: the amount of credit limit, if any, the terms of refunding, the cooling-off period, if any.
In case of overdue payment by the consumer with regard to the acquisition of goods, the rights of supplier or, individually, the credit institution are conditioned by the provisions of the Greek Civil Code.
In case where the consumer achieves his conventional obligations before they are rendered due he is eligible to a reduction on the total credit cost. This reduction will be equal to the difference between the remaining sum at the day of refunding and the current value of remaining sum on the same day.
In order to achieve this, the consumer has to declare it in writing and to legally communicate to the creditor his intention to discharge his conventional obligations before the time fixed by the agreement, at least 30 weekday days from the date of notification, unless the consumer explicitly has asked for a later date.
A provision which is very important is the one which specifies that in case where the creditor's rights under a credit agreement are assigned to a third person, the consumer shall be entitled to plead against that third person any defence which was available to him against the original creditor. The consumer is also entitled to bring to the third person any requirements he/she has against the original creditor, however only in the following cases:
a) in order to buy goods or obtain services the consumer enters into a credit agreement with a person other than the supplier of those goods or services
b) the grantor of the credit and the supplier of the goods or services have a pre-existing agreement whereunder credit is made available exclusively by that grantor of credit to customers of that supplier, for the acquisition of goods or services from that supplier
c) the consumer referred to in subparagraph (a) obtains his credit pursuant to that pre-existing agreement
d) the goods or the services that are covered by the convention of credit are not provided or are provided in part, or do not correspond at any way to the terms of the contract of supply,
e) the consumer has pursued his remedies against the supplier but has failed to obtain the satisfaction to which he is entitled.
The consumer, after the exercise of the lawsuit and until a Court of Appeal decision is published that would judge on the dispute between the consumer and the supplier, has right to deny the payment of his pending debt to the credit institution.

Problems consumers face
The consumer credit problems that Greek consumers are faced with are several and varying. In many cases, the credit institutions do not respect the abovementioned terms, however this is not noticed as the majority of the consumers do not actually know what the law provides and what exactly are their rights.
For example, most of the times the consumers do not know, or are not properly informed, that a cooling-off period is provided by the law. Often they believe that it is an additional benefit provided by the credit institution, given to them preferentially.
Also, another term that is almost never respected is the consumers’ right to a reduction of the total cost of credit in case of earlier refunding. On the contrary, in most cases the credit institution defines a clause against the consumer, specifying that in case of earlier refunding the consumer has to bear heavy consequences (retaining of property of good by the supplier).
A very important problematic element of the current practice in Greece is that in the case where the creditor's rights under a credit agreement are assigned to a third person, the consumer is not clearly and specifically informed about this. Thus results a confusion and a serious misunderstanding about who the creditor is: the supplier of the goods/services or the credit institution -usually a bank. The consumers tend to believe that the credited amount is ‘owned’ to the supplier of goods/services. See further on the ‘Beauty Centres’ case.
Moreover, the consumer is not informed that in the above mentioned case (creditor's rights assigned to a third person), he/she is entitled to plead against that third person any defence which was available to him against the original creditor when the aforementioned provisions exist. However, this may happen only after the full exhaustion of juridical means from the side of consumer without his/her satisfaction. This clause is particularly disadvantageous for the consumer as it implies a time, money and psychological energy consuming process.
The Beauty Centres case
Beauty Centre treatments have become quite fashionable in Greece during the last five years. Many new such centres were opened in many cities all over Greece and business was and is flourishing for most of them.
The most favourite payment practice followed by almost all of those centres is the issuance of a credit card with a set amount of monthly instalments paid to the bank collaborating with the centre in each case.
The procedure is as follows:
? The customer agrees to a treatment that will expand over a number of appointments at the beauty-centre.
? The beauty-centre proposes a payment-scheme in monthly instalments through a credit card that will be issued for the client. They offer to undertake ALL THE NECESSARY (AND TIME-CONSUMING) REDTAPE for the issuance of the credit card.
? The customer agrees that this is OBVIOUSLY the best way to deal with the cost of the treatment and signs the necessary papers. Little attention is given to the small-lettered conditions laid down in the bank contract as the consumer’s attention is focused on the treatment, its beautiful results etc.
? The credit card is issued, charged with the whole amount to be paid in monthly instalments.
Serious problems started when one of those beauty-centre chains went bankrupt. All its branch-offices closed down suddenly and thus all treatment programmes were stopped without having being completed and without any previous notice. Some had not even started yet.
All clients were left with credit cards loaded with amounts of money that had to be paid but for no treatment.
The associated banks started demanding the money from those people who either definitely refused to pay and risked facing all the related dispute with the bank or were at a loss about what they should do.
When consumers started contacting us it proved that there did not know that their creditor was the Bank due to serious lack of information by the Beauty Centre Company. The company had not inform the client that from the moment the credit card was issued the creditor was the Bank and not the Beauty Centre Company. The company had already received the payment of the full amount from the bank and then the bank demanded it from the client.
We contacted the Bank and we acted as an intermediary between them and the client. The Bank agreed to find a solution to this kind of problems and that the client would have to pay only the minimum of each instalment until the solution is found.
A proper solution to this situation is still pending while a second beauty centre went also bankrupt just three days before this report was written.