Nabiullina demanded that installment plans be equal to loans

The installment plan mechanism in its current form is evil: this, in a nutshell, is the meaning of Elvira Nabiullina’s statement. According to the head of the Central Bank, installment payment, being, in fact, a full-fledged consumer loan, unlike it, is not regulated by law. This means that a person using this popular service is initially vulnerable in his rights, “is not protected by anything, including in terms of the amount of penalties, penalties, and so on.”

“The installment plan itself is a normal, useful and technologically advanced product,” Nabiullina noted at a recent meeting of President Putin with members of the government. – But it is important that the person who takes out the installment plan is as protected as the one who takes out a classic loan. Therefore, legislative norms are also needed in this direction.”

As Mikhail Mamuta, head of the service for protecting consumer rights and ensuring the availability of financial services of the Central Bank, previously reported, the regulator sees practices where large commissions are “hardwired” into the installment agreement (BNPL – “buy now, pay later”), which the client does not realize. In addition, there are risks of the client’s unaccounted debt load when issuing installment plans.

Stores usually advertise this service as a way to make purchases without overpaying. Until the crisis of 2008, this was true. The buyer made a down payment and signed an agreement to pay the remaining amount without interest. By 2023, there will be practically no net installment plans left: today it is a full-fledged credit product. In order not to take risks, traders involve a third party – a bank. Who pays the entire amount for the buyer, and then collects the debt from him. In this case, the store includes interest for using money in the price of the goods.

And, although after applying for an installment plan the price for the buyer does not change, in fact he takes out a loan: the monthly payment and interest are separately specified in the contract. For example, in popular electronics markets they provide installment plans for a period of 3-24 months (the minimum amount is 3 thousand rubles), and in large banks they provide consumer credit for a period from three months to five years (30 thousand rubles).

In both cases, failure to pay damages your credit history and results in fines. Each bank has its own rules, but on average, customers are charged about 700 rubles for each late payment.

“The service is associated with the risk of failure to repay the payment on time and subsequent fines,” explains Dmitry Yanin, Chairman of the Board of the International Confederation of Consumer Societies (ConfOP). – Moreover, when applying for an installment plan, the store does not make a request to the Credit History Bureau. Accordingly, there is no independent assessment of the solvency of a person, who may simply not realize that he will not be able to afford the next loan. Nabiullina is right: the situation requires legislative regulation. It is necessary to make changes to the Law “On Consumer Credit” that will equate installment plans to a regular loan – in terms of the amount of fines and disclosure of information about the cost of the service.”

But, Yanin notes, the Central Bank does not have the right of legislative initiative, unlike the State Duma. And until there is at least one deputy in parliament who is ready to promote the regulator’s ideas for protecting consumer rights, citizens will continue to face risks at the everyday level. No one knows how many specific cases of falling into debt dependence through installment plans occur in Russia, since they are not reflected in the BKI statistics. At the same time, according to the expert, both loans and goods in installments, as a rule, are taken out by Russians with low incomes.

The Bank of Russia sees two dangers in the rapid spread of installment sales practices. The first is misleading citizens about the profitability of this method of purchase. After all, an overpayment in relation to the price of a product can be higher than if a person paid for it immediately by taking out a bank loan, notes the Chairman of the Russian Consumer Union, Petr Shelishch.

According to the Russian Federation Law “On the Protection of Consumer Rights,” having offered a product with a deferred payment condition, the seller is obliged to inform the buyer about the full amount to be paid and the repayment schedule for this amount. But who and how monitors compliance with this norm? No one and no way.

“The second danger that the Central Bank points out is the growth of the population’s debt burden, which it cannot control,” says Shelishch. – If it monitors loans issued by banks and can influence them (by establishing mandatory requirements for the sector), then the regulator does not see the volume of actual lending to buyers by sellers through installments and has no leverage on the situation. And this creates new risks: Russians with an increased debt burden, whom banks will definitely refuse a new loan, can increase their debts through installment purchases.

The threat is extremely serious. I believe it would be worthwhile to legally oblige sellers using the installment plan mechanism to inform the Bank of Russia about such sales and buyers.”

In 95% of cases, the consumer actually deals not with an installment plan, but with a loan, and on the most unfavorable terms. According to Polina Gusyatnikova, senior managing partner of the law firm PG Partners, in stores you can often find crossed out price tags at which goods are allegedly offered in installments, with monthly payments of 500-1000 rubles. But when the buyer applies for it, it turns out that this is a loan with a very high interest rate, sometimes up to 50% per annum or more. Most often it happens like this: the payment actually turns out to be within the amount indicated on the price tag, but it is calculated for a longer period.

“There is no judicial practice in such cases,” says Gusyatnikova, “since, as a rule, the amounts do not exceed several thousand rubles. Nobody will sue because of them. When making purchases of such amounts, consumers usually do not read the documents much and only find out after the fact what is going on. Therefore, it is necessary to protect citizens.”