Retailers must check customers’ creditworthiness under new law

Retailers in Austria will have to check customers’ creditworthiness before offering instalment purchases from November 20, ORF reported. If the assessment is negative, the purchase cannot be concluded.

The amendment to the Consumer Credit Act is intended to make it harder or prevent so-called teaser offers in retail. The new requirement will apply to retailers as well as banks.

Melanie Gössler of the Styria Chamber of Labour welcomed the change, calling it an important step to prevent over-indebtedness. She said buy now, pay later models could lead people into a debt spiral by encouraging them to make repeated purchases.

Kerstin Kogler of Styria’s debt counselling service said people who already had financial problems were particularly quick to accept such offers. She added that impulse purchases could also become a problem when customers later questioned whether they had really needed the products.

Small retailers, however, fear a competitive disadvantage. They say a bank-style credit assessment would be difficult and too time-consuming for them to carry out compared with large retailers.