Portfolio Gallery: Alternative Dispute Resolution

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Certain Aspects Concerning Contracts for the Sale of Goods (Directive EU 2019/771)

Directive (EU) 2019/771 on certain aspects of contracts for the sale of goods governs the rules which apply to the sale of goods[1], whether they are existing or to be manufactured in the future.[2] The Directive is a maximum harmonization Directive[3]  and covers goods that incorporate digital content or digital services, which for the purposes of the Directive are called “goods with digital elements”.[4] However, it does not include goods that serve exclusively as a tangible medium used exclusively as a carrier for the transfer of digital content.[5]

For a good to be considered as a “good with digital element”, the absence of digital content or service must prevent the goods from performing their functions.[6] It is noted that where the contract concerns the sale of purely digital content, then the above Directive does not apply, but Directive (EU) 2019/770 applies.

The Directive applies to sales contracts between a consumer and a seller[7]. A sales contract is defined as

“…any contract under which the seller transfers or undertakes to transfer ownership of goods to a consumer, and the consumer pays or undertakes to pay the price thereof;”

The definition given to the seller and the consumer is the same as that given in other Directives. For example, “Seller” is defined as:

 “…any natural person or any legal person, irrespective of whether privately or publicly owned, that is acting, including through any other person acting in that natural or legal person’s name or on that person’s behalf, for purposes relating to that person’s trade, business, craft or profession, in relation to contracts covered by this Directive;”

Consumer is defined as:

“…any natural person who, in relation to contracts covered by this Directive, is acting for purposes which are outside that person’s trade, business, craft or profession;”

CONFORMITY OF GOODS AND LEGAL GUARANTEE

According to the Directive, the seller must deliver to the consumer, goods that conform with the requirements of the Directive. There are subjective and objective requirements of conformity in the Directive.

The subjective requirements for conformity state that the goods shall conform with the requirements agreed between the seller and the consumer, as required by the sales contract. These requirements may include, but are not limited to, the quantity, quality, type and description of the goods, their suitability for a particular purpose, and their delivery with all the agreed accessories and instructions.[8]

The objective requirements for conformity require that the seller sells goods which are suitable for the purposes for which goods of the same type are normally used, provided they are supplied with accessories and instructions which the consumer can reasonably expect to receive or if the sale is by sample, then the goods must correspond to the sample which the seller made available to the consumer. The goods must also have the quality and other characteristics normally found in goods of the same type, which the consumer may reasonably expect given the nature of the goods and considering any public statement made by or on behalf of the seller, or other persons in previous links of the chain of transactions.[9]

Any lack of conformity resulting from the incorrect installation of the goods shall be regarded as lack of conformity of the goods by the seller himself (not a third party) or due to shortcomings in the installation instructions provided by the seller to the consumer.[10]

The Directive provides for a legal guarantee in any sale of goods. Based on this, the seller is responsible for any non-compliance that becomes apparent within 2 years from the time of delivery.[11] This guarantee also covers second-hand goods, but, in relation to such goods, the parties may agree for shorter periods which may not be less than one year.[12] Such an agreement is considered invalid in relation to new goods. [13]

The burden of any lack of conformity which becomes apparent within one year of the time when the goods were delivered is presumed to have existed at the time when the goods were delivered unless this presumption is incompatible with the nature of the goods or with the nature of the lack of conformity.[14]

CONSUMER RIGHTS IN CASE OF LACK OF CONFORMITY

In the event of a lack of conformity, the consumer is entitled to:[15]

  • Request the repair or replacement of the goods unless the remedy chosen would be impossible or, compared to the other remedy.[16] The repair should be free of charge and must be carried out within a reasonable period of time from the moment the seller has been informed by the consumer about the lack of conformity and without significant inconvenience to the consumer.[17] In case of replacement of goods, the repair of the goods is performed at the expense of the seller.[18]

Where the restoration of conformity is impossible or imposes costs on the seller that would be disproportionate, taking into account the value of the goods would have if there were no lack of conformity, the significance of the lack of conformity, then the seller may refuse to bring the goods into conformity.[19]

  • Request a price reduction. The reduction is proportional to the decrease in the value of the goods received by the consumer compared to the value the goods would have if they were in conforming with the contract.[20]
  • Terminate the contract. Termination means that the consumer returns the goods at the seller’s expense and the seller returns to the consumer the price he paid for the goods as soon as he receives the goods or some proof from the consumer that the goods have been returned.[21]21 Where the lack of conformity relates to part of the goods, then the consumer may terminate the sales contract only in relation to those goods, unless the consumer cannot reasonably be expected to accept to keep only the conforming goods.[22] 22

According to article 13 (4) of the Directive, remedies 2 and 3 above may be exercised when:[23] 23

“(a) the seller has not completed repair or replacement or, where applicable, has not completed repair or replacement, or the seller has refused to bring the goods into conformity;

(b) a lack of conformity appears despite the seller having attempted to bring the goods into conformity;

(c) the lack of conformity is of such a serious nature as to justify an immediate price reduction or termination of the sales contract; or

(d) the seller has declared, or it is clear from the circumstances, that the seller will not bring the goods into conformity within a reasonable time, or without significant inconvenience for the consumer.”

The consumer shall not be entitled to terminate the contract if the lack of conformity is only minor.[24]

COMMERCIAL GUARANTEES

A differentiation of this Directive from the older Directive 1999/44 / EC (which has now been repealed)[25] is that there is now an explicit differentiation between legal guarantees and commercial guarantees.[26] According to the Directive, the commercial guarantee is:

“any undertaking by the seller or a producer (the guarantor) to the consumer, in addition to the seller’s legal obligation relating to the guarantee of conformity, to reimburse the price paid or to replace, repair or service goods in any way if they do not meet the specifications or any other requirements not related to conformity set out in the guarantee statement or in the relevant advertising available at the time of, or before the conclusion of the contract”

The Directive states that the commercial guarantee is binding on the guarantor and in the event that the terms of the commercial guarantee are less favorable to the consumer than those included in associated advertisements, then the more advantageous conditions should prevail.[27] The commercial guarantee statement shall be provided to the consumer on a durable medium the latest at the time of the delivery of the goods and shall therefore be expressed in plain and intelligible language.[28]

The publication of this article is partly funded by the European Union’s “Consumer Programme (2014-2020)”.

[1]  Directive (EU) 2019/771, Preamble 10

[2]  Ibid Article 3(2)

[3]  Ibid Article 4

[4]  Ibid Preamble 13

[5]  Ibid Article 3(4)(α)

[6]  Ibid Article 2(5)

[7]  Ibid Article 3(1)

[8] Ibid Άρθρο 6, Προοίμιο 26

[9] Ibid Άρθρο 7(1), Προοίμιο 29

[10] Ibid Άρθρο 8

[11] Ibid Άρθρο 10(1)

[12] Ibid Άρθρο 10(6)

[13] Ibid Άρθρο 21(1)

[14] Ibid Άρθρο 11(1)

[15] Ibid Άρθρο 13(1)

[16] Ibid Article 13(2)

[17] Ibid Article 14(1)

[18] Ibid Article 14(2)

[19] Ibid Article 13(3)

[20] Ibid Article 15

[21] Ibid Article 16(3)

[22] Ibid Article 16(2)

[23] Ibid Article 13(4)

[24] Ibid Article 13(5)

[25] Ibid Article 23

[26] Ibid Article 2(12)

[27] Ibid Preamble 62⸱ Article 17(1)

[28] Ibid Article 17(1)

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Misleading and Comparative Advertising

Part III of the Consumer Protection Law of 2021 applies to:[1]

  • Misleading advertising of traders to traders and their unfair consequences; and
  • Comparative advertising of traders to traders and/or consumers by defining the conditions under which comparative advertising is allowed

WHAT IS “MISLEADING ADVERTISING”

Misleading advertising means any advertising which in any way, including its presentation, deceives or is likely to deceive the persons to whom it is addressed or whom it reaches and which, by reason of its deceptive nature, is likely to affect their economic behavior or which, for those reasons, injures or is likely to injure a competitor.[2]

In determining whether an advertisement is misleading, account is taken of all its features, and in particular of any information it contains concerning:[3]

  1. the characteristics of goods or services, such as their availability, nature, execution, composition, method and date of manufacture or provision, fitness for purpose, uses, quantity, specification, geographical or commercial origin or the results to be expected from their use, or the results and material features of tests or checks carried out on the goods or services.
  2. the price or the manner in which the price is calculated, and the conditions on which the goods are supplied, or the services provided and
  3. the nature, attributes, and rights of the advertiser, such as his identity and assets, his qualifications and ownership of industrial, commercial, or intellectual property rights or his awards and distinctions.

WHAT IS “COMPARATIVE ADVERTISING”

‘Comparative advertising’ means any advertising which explicitly or by implication identifies a competitor or goods or services offered by a competitor.[4]

Comparative advertising is generally permitted, provided however that the following conditions are met:

  • it does not constitute a misleading commercial practice or omission
  • it compares goods or services meeting the same needs or intended for the same purpose
  • it objectively compares one or more material, relevant, verifiable, and representative features of those goods and services, which may include price
  • it does not discredit or denigrate the trademarks, trade names, other distinguishing marks, goods, services, activities, or circumstances of a competitor
  • for products with designation of origin, it relates in each case to products with the same designation
  • it does not take unfair advantage of the reputation of a trademark, trade name or other distinguishing marks of a competitor or of the designation of origin of competing products
  • it does not present goods or services as imitations or replicas of goods or services bearing a protected trademark or trade name
  • it does not create confusion among traders, between the advertiser and a competitor or between the advertiser’s trademarks, trade names, other distinguishing marks, goods, or services and those of a competitor.

In addition to the powers vested in the Consumer Protection Service (CPS) to investigate infringements of the Law, according to Article 56 of the Law, the CPS has a duty in the interests of consumers, competitors, and the general public, to examine upon complaint or ex officio whether any advertisement, whether published or imminent, is misleading or prohibited comparative advertising.[5] 5

In the event of a complaint, the CPS may request the complainant to verify that:

  • it has filed a complaint for such advertising, in such standard redress mechanisms as the Authority deems appropriate, having regard to all the circumstances of the case
  • a reasonable opportunity has been afforded to deal with such a complaint by those redress mechanisms; and
  • the complaint has not been satisfactorily addressed through these mechanisms.

This article has been prepared by the Cyprus Consumer Center for Alternative Dispute Resolution and is co-financed by the European Union under the Consumer Program (2014-2020).

The Cyprus Consumer Center for Alternative Dispute Resolution is a Body approved by the Consumer Protection Service and notified to the European Commission.

[1] The Consumer Protection Law of 2021, Law 112 (I)/2021, a 9

[2] The Consumer Protection Law of 2021, Law 112 (I)/2021, a 10

[3] The Consumer Protection Law of 2021, Law 112 (I)/2021, a 11

[4] The Consumer Protection Law of 2021, Law 112 (I)/2021, a 10

[5] The Consumer Protection Law of 2021, Law 112 (I)/2021, a 56

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Payment Service Providers and Alternative Dispute Resolution

Mobile payments are receiving increasing attention around the world, both from consumers and merchants, as an alternative to using cash, checks or credit cards. Considering market developments and to ensure the rights of consumers and traders, the Republic of Cyprus has incorporated the provisions of European Union directives into our national legislation.

The rights and obligations of payment service providers, including electronic money services, are governed by:

a) Electronic Money Law of 2012 and

b) Law on the Provision and Use of Payment Services and Access to Payment Systems of 2018 (“the Law on the Use of Payment Services”)

According to the Electronic Money Law of 2012, electronic money means monetary value stored in electronic form, including magnetic form. Essentially, the electronic money issuer issues, upon receipt of a sum of money, electronic money of equal face value to the consumer. As a result, the consumer can either redeem electronic money or use it to acquire goods or services.

In addition, the Law on the Use of Payment Services regulates the transparency and information requirements of Payment Service Providers (“Providers“) to consumers as well as the rights and obligations associated with the provision and use of payment services. Among other things, the Providers must provide the Consumer with basic information about the performed payment transactions at no additional charge.

Similarly, subsequent information on payment transactions should also be provided monthly and free of charge. Within the information provided, the following are also included:

A) The type and procedure for notifying consent to initiate a payment order.

B) The maximum execution period within which payment services must be provided.

C) All charges to be paid by the user to the provider.

In cases where there is a violation of consumer rights and in accordance with Article 98 of the Law on the Use of Payment Services, the consumer and other interested parties may submit complaints, in writing or by electronic means, regarding allegations of violations of the provisions of the Law, to the Central Bank.

In addition, Providers are obliged, within 15 days, to make every effort to respond, in paper form or, if this is agreed between the payment service provider and the user (“User”), in another durable medium, to the complaints of users.

If after the Provider’s attempt to resolve the dispute, the User is still dissatisfied, then the former is obliged to inform the User of at least one alternative dispute resolution body that is responsible for resolving disputes regarding the rights and obligations arising by the Legislation. In addition, the Provider should specify how to access further information about this alternative dispute resolution body, as well as the conditions for its use.

It is noted that for the alternative resolution of disputes that arise between Users and Providers and which concern rights and/or obligations arising from the Legislation, the body that covers the resolution of such disputes is the Cyprus Consumer Center for Alternative Dispute Resolution.

This article has been written on behalf of the Cyprus Consumer Center for Alternative Dispute Resolution and is co-financed by the European Union under the Consumer Program (2014-2020).

The Cyprus Consumer Center for Alternative Dispute Resolution is a Body approved by the Consumer Protection Service and notified to the European Commission.

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Pre-Contractual Obligations of Banks in Relation to Consumer Mortgages

Do you have a mortgage? – Find more about your rights here!

One of the most important areas of consumer protection is financial services. At the level of the European Union there are various Directives which protect the consumer either by securing certain rights or by preventing banks from using specific practices.

For general consumer rights in relation to financial services you can follow the link below.

In this article we analyze some of the obligations which Banks owe to Consumers before concluding a loan secured by a mortgage (for other obligations click here).

Relevant is Law 41 (I)/2017 on Credit Agreements for Consumers relating to Residential Immovable Property Law of 2017.

1) Professional Ethics and Staff Knowledge

In relation to financial products offered by Banks, the Banks should act honestly, fairly, with transparency and professionalism and consider the rights and interests of the consumers.

The remuneration of bank employees should not be linked in any way to the number or percentage of applications accepted.

According to the Law, the Bank’s employees must have an appropriate level of knowledge.

2) Securing the Signature of the Spouse

When real estate is mortgaged, the Bank must obtain the written consent of the borrower’s spouse.

3) Providing Information Free of Charge

Also, the information provided to the consumer for the purposes of compliance with the provisions of this Law, this must be provided for free.

4) Obligations in Relation to Advertisements

Any advertisement and commercial announcement for credit agreements must be legitimate, clear, and not misleading. Each advertisement should provide specific information including the total amount of credit, the duration of the credit, etc.

5) Prohibition of Tying and Bundling Practices

It is forbidden for a bank to use tying practices. A tying practice is the offering or the selling of a credit agreement in a package with other distinct financial products or services where the credit agreement is not made available to the consumer separately.

Bundling practices are allowed. A bundling practice is the offering or the selling of a credit agreement in a package with other distinct financial products or services where the credit agreement is also made available to the consumer separately but not necessarily on the same terms or conditions as when offered bundled with the ancillary services.

Regarding insurance policies, the Bank must accept an insurance policy from an insurer different from the one preferred by the bank when the level of guarantee of this insurance policy is equivalent to that proposed by the bank.

6) Provision of Information by Banks

According to the Law, the Bank must have in all cases provide in writing or in another durable medium or in electronic form, clear and comprehensible general information about the credit agreements they offer. Such information is for example the additional costs to the consumer, the description of terms related to early repayment, etc.

7) Creditworthiness Assessment of the Consumer

The Bank has a duty to conduct a thorough assessment of the creditworthiness of the consumer.

The creditworthiness shall take due account of the relevant factors in determining whether the consumer will meet its obligations under the credit agreement.

The Bank is required to establish and maintain the procedures and information on which the assessment is based. For creditworthiness purposes, the bank does not rely primarily on the assumption that the value of the property intended for residence exceeds the amount of the credit or on the assumption that the value of the property intended for residence will increase, unless the purpose of the credit agreement is the construction or renovation of a property intended for a home.

Following the conclusion of a credit agreement with a consumer, the bank may not cancel or amend the agreement to the detriment of the consumer, on the grounds that the creditworthiness assessment was not properly performed unless the consumer knowingly omitted or falsified information.

The above information concern the duties of the Bank before the conclusion of a credit agreement relating to real estate intended for residence and secured by a mortgage. For the duties of a bank after the conclusion of the credit agreement you can click here.

This article has been written on behalf of the Cyprus Consumer Center for Alternative Dispute Resolution and is co-financed by the European Union under the Consumer Program (2014-2020).

The Cyprus Consumer Center for Alternative Dispute Resolution is a Body approved by the Consumer Protection Service and notified to the European Commission.

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Unfair Contract Terms in Loan Agreements

In a previous article we analysed the cases where a term in an agreement between a consumer and a business can be considered unfair. In this article we analyse cases of such terms in loan agreements.

What is an Unfair Contract Term?

An unfair contract term is a term that creates significant imbalance to the rights of the consumer to the benefit of the trader despite the requirement of good faith that should govern business and consumer contracts.

Such clauses are usually inserted in the standard terms used by a trader no matter how reasonable such a requirement is.

Where there are such clauses in consumer and business contracts, they are considered invalid – that is, they do not bind the consumer.

 Loan Agreements and Unfair Contract Terms

The following terms in a loan agreement are considered unfair:

1) Clauses that allow a credit institution to unilaterally require the immediate repayment of a loan.

2) Clauses which add to the interest rate charges, other charges connected with the operation of the credit facility.

The Following Cases in a Loan Agreement have been Deemed Unfair by the Consumer Protection Service:

1) Terms which allow a Bank to change the basic interest rate, margins, commission or any other charges or expenses as well as the method of calculation of the above.

2) Terms which state that the Bank is allowed to change the margin from time to time. Such a term is also explicitly prohibited by Law since 2014. However, in accordance with the decision of the Consumer Protection Service, this prohibition applies from 1996 where the Unfair Contract Terms Law came into force.

3) Terms which allow the Bank to impose any charges, expenses, charges and/or rights that the Bank at its sole discretion and for which it will notify the Customer in writing.

4) Terms which state that the Customer has received a “List of Interest Rates and Charges” as well as the “General Terms and Conditions” by the Bank.

We note that although the above terms have been deemed unfair by the Consumer Protection Service, the matter is left for the court to decide on a case by case basis.

As mentioned above, if a term in a contract is found to be unfair, then it does not bind the consumer, but the rest of the agreement remains binding on the parties unless it cannot continue to exist without the unfair term.

This article has been prepared by the Cyprus Consumer Center for Alternative Dispute Resolution and is co-financed by the European Union under the Consumer Program (2014-2020).

The Cyprus Consumer Center for Alternative Dispute Resolution is a Body approved by the Consumer Protection Service and notified to the European Commission.

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Liabilities of Banks in Relation to Consumer Mortgage Loans in a Foreign Currency

Do you have a mortgage? Find out more about your rights here

In a previous article we analysed the pre-contractual obligations of banks in relation to Consumer Mortgages which are secured by a mortgage. In this article we analyse some of the other obligations which banks owe to a Consumer in accordance with Law 41 (I)/2017 on Credit Contracts for Consumers relating to Residential Immovable Property Law of 2017 as well as obligations stemming from loans in a foreign currency.

1) Review Period of the Credit Agreement

Prior to the conclusion of the credit agreement, the creditor provides the consumer with a review period of 15 working days which are calculated from the day of providing a binding offer to the consumer, so that the consumer has enough time to compare the offers, assess their consequences and make an informed decision. This offer is binding on the creditor for the duration of the review period and the consumer may not accept the offer before the first 5 working days of the review period have elapsed.

2) Right of Withdrawal After the Signing of the Agreement

The consumer has the right to withdraw within 5 working days from the signing of the agreement, without compensation and without stating a reason unless he disburses any amount before the expiration of the deadline.

3) Debt Rate Changes

The Bank is obliged to inform the consumer by written notice or other fixed means of any change in the debit interest rate before the entry into force of the new interest rate.

4) Delays

The creditor provides a reasonable period of tolerance before initiating debt settlement and sale procedures to recover debts.

Foreign Currency Loans

The cases of loans in a foreign currency deserve special mention.

Before concluding a credit agreement for a foreign currency loan, the creditor asks the consumer to provide information about his/her knowledge and experience in relation to the foreign exchange risk involved in the proposed credit agreement, so that the creditor can assess whether the intended credit agreement is appropriate for that consumer and that the consumer is able to assess the risk involved and the potential impact.

In the event that the creditor considers, on the basis of this information, that the intended credit agreement is not appropriate for the consumer in question and/or that the consumer is unable to assess the risk involved in the intended agreement and its potential impact, then the creditor should warn the consumer about this. The warning may be provided in a standard format.

In the event that a credit agreement concerns a loan in a foreign currency, the creditor, at the time that the agreement is concluded, will have to fulfill one of the two obligations.

The first is that the consumer has the right to convert the contract into an alternative currency, meaning that, in the event that the consumer’s obligations under the credit agreement are secured by a guarantee or other security agreement (i) any such guarantor  agrees in writing to the conversion into an alternative currency or (ii) where the consent of the guarantor is not provided, then that the conversion into an alternative currency is made under such conditions as may be agreed between the creditor and the consumer. It is noted that in such a case, the exchange rate at which the conversion is made is the exchange rate applicable on the day of the conversion, unless otherwise provided in the credit agreement.

Alternative currency is the currency in which the consumer receives his income or retains the assets from which the credit is to be repaid, as indicated by his most recent creditworthiness assessment. The creditor can determine if the consumer has both options or only one of them.

The second is that the foreign exchange risk to which the consumer is exposed is hedged throughout its duration by a financial hedging instrument, listed for trading on a regulated market.

This article has been prepared by the Cyprus Consumer Center for Alternative Dispute Resolution and is co-financed by the European Union under the Consumer Program (2014-2020).

The Cyprus Consumer Center for Alternative Dispute Resolution is a Body approved by the Consumer Protection Service and notified to the European Commission.

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Consumer Rights and Early Loan Repayment

In loan agreements covered by European Legislation a consumer has the right to early repayment of a loan.

What is the Right to Early Repayment?

The right to early repayment is the right of a consumer to repay a loan before the agreed deadline without being charged the additional amount he would pay in interest had he repaid it within the agreed deadline.

Example:

A consumer borrows the amount of €50,000 with an annual interest rate of 5%. It is agreed that the amount will be repaid with  monthly instalments amounting to €530.57 until repayment. This means that the loan will be repaid in ten years from the date of receiving the loan. In total, the interest rate payable until repayment is €13,668.

When does this Right Exist?

There are two types of credit agreements in which the right of early repayment/repayment is allowed. These credit agreements are based on European Directives.

Consumer Credit Contracts that do not concern Real Estate

The first type of credit agreements are agreements not secured by a mortgage, or which relate to the acquisition of real estate, construction of a building or which are for more than €75,000 (unless they relate to unsecured credit agreements for property renovation) or credit agreements for less than €200, or hire-purchase agreements as well as some other contracts. Such agreements are covered by Law 106 (I)/2010 on Consumer Credit Contracts Law of 2010.

The right of early repayment in relation to the first type of contract provides that in the event of early repayment, the creditor is entitled to compensation not exceeding 1% of the portion of the credit repaid early where the period between early repayment and the agreed maturity of the contract exceeds one year and 0.5% of the price of the credit where this period does not exceed one year.

Where the amount of the early repayment is less than €10,000 in any period of 12 months, then the creditor cannot claim compensation for early repayment.

Consumer Credit Contracts in Relation to Real Estate

The second type of contract in which the consumer has the right to early repayment is where the credit agreement relates to real estate intended for residence. These contracts should be secured by a mortgage or other similar security and relate to real estate intended for residence or credit agreements whose purpose is to acquire rights to land or buildings. These contracts are covered by Law 41 (I)/2017 on Credit Contracts for Consumers in relation to Properties intended for Residence Law of 2017.

In this type of contract, the creditor is entitled to compensation for early repayment which is calculated on the basis of a specific mathematical formula. The creditor may also claim any administrative expenses related to the early repayment, which cannot exceed €100.

This article has been prepared by the Cyprus Consumer Center for Alternative Dispute Resolution and is co-financed by the European Union under the Consumer Program (2014-2020).

The Cyprus Consumer Center for Alternative Dispute Resolution is a Body approved by the Consumer Protection Service and notified to the European Commission.

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Consumer Rights in Loan Agreements – Consumer Credit

Specific Consumer Rights in Loan Agreements Under € 75,000 Euros

Where a credit agreement (i.e., loan) between a consumer and a credit institution concerns a total amount of credit between €200 and €75,000 it is covered by Law 106 (I)/2010 on Consumer Credit Agreements.

The above Law contains specific information obligations of credit institutions to the consumer which should be contained in advertising before and after the conclusion of the contract with the consumer. The Law also contains specific obligations for assessing the creditworthiness of the consumer.

In relation to advertisements, for example, the Credit Institution should indicate the total amount of the credit, the debit interest rate, the APR and the duration of the credit agreement.

Prior to concluding the contract, the creditor should provide the consumer with standard European consumer credit information such as the creditor’s identity, key features of the credit product and the cost of credit.

According to the Law, before concluding the credit agreement, the credit institution assesses the creditworthiness of the consumer based on sufficient data obtained on a case-by-case basis by the consumer and research in an appropriate database.

In case of a complaint from a consumer to a company regarding a contract it has with a company, the Consumer has the right to contact the Cyprus Consumer Center for Alternative Dispute Resolution.

The credit agreement should contain specific information and the consumer should receive a copy of it. The information that should be included in the credit agreement is the following: the type of credit, the identity of the parties, the duration of the credit, the total amount of credit, the APR, the number and frequency of payments, the interest rate arrears, information on notarization fees, the procedure to be followed for exercising the right of termination.

Two important rights provided to the Consumer in case of a credit agreements covered by the above Law are the right of withdrawal as well as the right of early repayment of the loan.

Right of Withdrawal

A consumer has the right to withdraw from the credit agreement within 14 days from the day of concluding the agreement or receiving the terms of the agreement and its information. This means that the consumer can cancel the contract at any time within 14 days.

The time limit is deemed to have been complied with if the notice, given in writing or on another durable medium made available to the creditor and to which the latter has access, is sent before the expiry of the period; the capital and accrued interest on this capital must be paid from the date of withdrawal without undue delay and no later than 30 calendar days from exercising the right of withdrawal to the creditor.

The creditor is not entitled to any other compensation from the consumer in the event of withdrawal, other than compensation for non-refundable fees paid by the creditor to any public administrative service.

Right of Early Repayment

Under this right, the creditor is entitled to compensation only for any costs that are directly related to the early repayment of the loan provided that the early repayment is made within a period of time for which the debit interest rate has been set. The compensation may not exceed 1% of the price of the credit repaid provided that more than one year remains before the agreed expiration of the credit. If it does not exceed one year, the compensation may not exceed 0.5% of the price of the credit repaid early.

This article has been prepared by the Cyprus Consumer Center for Alternative Dispute Resolution and is co-financed by the European Union under the Consumer Program 2014-2020.

The Cyprus Consumer Center for Alternative Dispute Resolution is a Body approved by the Consumer Protection Service and notified to the European Commission.

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What is the Procedure and Conditions for Filing a Consumer Dispute?

In 2017, the Alternative Dispute Resolution of Consumers Law of 2017 came into force, according to which a consumers can resolve their disputes with a trader within 90 days for free or for a symbolic cost. The dispute is resolved through a Body approved by the Consumer Protection Service and notified to the European Commission. Such a Body is the Cyprus Consumer Center for Alternative Dispute Resolution (www.adr.com.cy).

Because Alternative Dispute Resolution is a voluntary process, the resolution process is based on the good faith of the trader to come with “clean hands” in order to resolve a dispute with a consumer. You can see who these traders are at www.adr.com.cy.

What Consumer Disputes can the Cyprus Consumer Center Resolve?

Our Center can handle any consumer disputes. Consumer disputes are disputes arising from contracts of sale or contracts for the provision of services between a trader established in the Republic and a Consumer.

Examples of such differences are the following:

  1. A consumer bought a car from a dealer. The car has defects. The consumer can register a complaint to our Center in order to resolve the dispute.
  2. A bank which is a creditor to the consumer or which refused to open an account which the consumer requested. The consumer can file a complaint to us in order to resolve the dispute.
  3. The Consumer bought a TV online. He/she regrets, and wants to exercise his right to return it and get his money back. The company refuses. The consumer has the right to file a complaint.

In order for a complaint to be accepted by the Center, specific conditions must be met. According to our rules of procedure, these are the following:

1. The Consumer must first attempt to contact the trader in order to discuss the dispute and seek to resolve it dispute directly with him.

2. When the dispute is insignificant or is malicious.

3. When the dispute is examined or has been examined by another ADR Entity or Court.

4. When the Consumer has not submitted a complaint within one year from the date on which the consumer first submitted a complaint to the trader.

5. When the examination would significantly impair the effective operation of the Entity.

In the event that any of the above applies, then we may not accept to proceed with your complaint.

This article is co-funded by the European Union under the Consumer Program (2014-2020).

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How Do I Become a Mediator?

Do you want to become a mediator? The process is simple – find out how by clicking here

The use of mediation to resolve disputes is a fact. It is one of the methods which the European Union has chosen to resolve consumer disputes – as its main advantages are the low cost and efficiency of resolving disputes between a business and a consumer. With the advent of the Coronavirus, the delays in the field of justice as well as the cost of resolving disputes, mediation seems to be the future method of resolving conflicts.

In order for someone to become a mediator, certain conditions must be satisfied which are defined in the Law. We note that the specific conditions apply to all types of mediation (except for family mediation which is covered by a specific law).

For someone to be able to register as a mediator he/she must not be a civil servant and must have a clean criminal record. Nor should he/she be under guardianship or deprived of his legal capacity. Finally, the person must have a recognized higher education degree.

If the mediator meets the above conditions then, by attending a 40-hour training programme which has been approved by the Ministry of Justice and Public Order, he/she can register in one or both of the Registers kept by the Ministry of Justice.

In relation to consumer disputes, the Law requires that the mediator should possess the necessary skills of court dispute resolution as well as basic knowledge of law. This means that it is necessary to educate such a person in consumer law.

The Cyprus Consumer Center for Alternative Dispute Resolution is an Entity approved by the Ministry of Justice for the provision of the 40-hour mediation programme. The program includes training in mediation, conflict management and communication techniques. Also, 6 mediation scenarios for resolving civil and commercial disputes are included, and the participants are evaluated by trainers and feedback is provided.

The program is delivered in two weekends from Friday afternoon to Sunday.

The two Registers for Mediators are (1) the Register of Civil Mediators (Other than Commercial) and (2) the Register of Commercial Mediators. The mediator can be registered in the Civil Mediators Register as long as he/she is a member of the Cyprus Bar Association and holds the annual license to practice law. In the Commercial Mediators Register, the person must be able to register at the CCCI or ETEK.

If the person is a lawyer registered as such and he/she holds the annual license to practice, then in order to register in the Register of Commercial Mediators it is not necessary to undertake the the 40-hour mediation programme. In relation to civil cases, however, it is necessary to do so.

The Cyprus Consumer Center for ADR, offers a training program for mediators. The Center is an approved Entity by the Consumer Protection Service, an approved Mediators’ Training Center by the Ministry of Justice, notified to the European Commission and co-funded by the European Union under the Consumer Program (2014-2020).

Find out more about becoming a mediator here.

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