After the last economic crisis, when many Estonians were in debt, the state created legislation to establish how consumer credit can be advertised.

The rules apply to so-called quick loans, credit cards and repayments, said Kristina Jerjomina, legal adviser at the Ministry of Economic Affairs and Communications.

"The Advertising Act tells you exactly what information can and must be shown in advertising, and this is an exhaustive list. No other information may be included in the advertisement," she said.

The customer must be able to completely understand the terms and conditions and repayment schedule. But this is not always the case.

"There are a lot of irregularities," said Jerjomina. "We will be able to assess the impact when the requirements are met."

Compliance monitoring falls to the Consumer Protection and Technical Regulatory Authority (TTJA) and the agency has found many breaches of the law.

"We have found around 17 consumer credit advertisements from service providers. And 15 of these were infringements," said the TTJA's Diana Lints.

"Make a woman happy with debt"

Both the advertisement of terms and conditions and repayments are being broken. Readers often do not understand how much money they will need to pay back and the messages can sometimes be obscured.

"For example, there are calls for loans to buy Christmas presents. Or calls to take out a loan to take advantage of Black Friday offers. Or to make a woman happy on Women's Day," Lints said.

She said both lenders and those who display illegal advertising are at fault.

The TTJA's first move is not to hand out a punishment, but to try and educate companies about their mistakes. However, the new government is proposing drastic changes such as a ban on advertising.

But specifics have not yet been agreed upon, said Heljo Pikhof, a Social Democratic Party board member.

"But inviting people to take out quick loans has brought many, many people in Estonia to the brink of bankruptcy. And many of them have been left in debt for life," said Pikhof, who believes the sector should be more regulated, including advertisements through the mail.

"When the day of repayment arrives, creditors use very aggressive promotional tactics and even direct mail to invite consumers who have already taken out a loan and are in payment difficulties to borrow more."

Banking Association: Advertisers must take more responsibility

Katrin Talihärm, executive director of the Estonian Bank Association, does not agree with such a ban. She thinks advertisers must be more responsible.

"If we restrict the regulated market too much, i.e. the banks and the supervised creditors, are we not increasing the risk that alternative credit providers, alternative products, will pop up?" she said.

The definition of quick loans is also flexible and undefined so it is difficult to see what exactly will be affected, she said.

Talihärm roughly defined quick loans are loans that are easy to access that have a high-interest rate. "[But] If we were to try to write a legal definition based on this, it would not be an easy task at all," the expert added.

A similar ban was proposed in 2019 but came to nothing.

Jerjomina said the law is being reviewed and there are plans to create a draft later this year. However, she added, the idea needs to be checked against the Constitution.

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