ACM deals with high interest rate of online pawnshop 24Cash
Online pawnshop 24Cash has made a commitment to the Netherlands Authority for Consumers and Markets (ACM), promising it will bring its interest rates and loan terms in line with current rules on pawnshops. The interest rate of 24Cash was higher and its loan term shorter than allowed. ACM contacted the online pawnshop about these issues.
ACM has declared 24Cash’ commitment binding. This means that ACM is able to impose a fine of up to EUR 450,000 if the company fails to comply with the commitment. 24Cash’ interest rate was 19 percent, which is higher than the statutory maximum of 9 percent. Its loan term was at least one month, which is shorter than the minimum of two months.
Anita Vegter, Member of the Board of ACM, explains “ACM actively enforces compliance with the current rules on pawnshops in order to protect pawnshop customers, who are often in a vulnerable position, against too high interest rates or unclear conditions.”
What are pawns?
Consumers can take jewelry or other items to a pawnshop or jeweler, who will keep these items. In return, consumers receive a loan. If they want to reclaim their items, they have to repay the loan they received, plus an interest fee.
Maximum interest rate to be lowered on July 1, 2015
The new Dutch Pawnshop Act came into force on July 1, 2014, which has set a maximum interest rate for pawn loans. Since July 1, 2014, the maximum interest rate is 9 percent. From July 1, 2015, this maximum will become 4.5 percent per month. In addition, pawn loans must have a minimum loan term of two months, within which consumers are able to reclaim their items. Pawnshops must clearly inform consumers about the conditions of their pawn loans before consumers offer their items.
Buyback policies also fall under the new Dutch Pawnshop Act
The new pawnshop rules not only apply to traditional pawnshops and online providers, but also to jewelers and second-hand shops that have buyback policies as an extra service.