Latvian Parliament Lifts Ban on Consumer Credit Advertising, Imposes Strict Rules

The Latvian parliament has adopted amendments that repeal the previous ban on advertising consumer credit to private individuals. The changes are justified by the need to align Latvian legislation with EU requirements and ensure equal competition among financial service providers.

The new regulation imposes several restrictions to prevent irresponsible borrowing. Advertisements are prohibited from creating the impression that credit is a suitable solution for financial difficulties, implying that borrowing replaces savings, or suggesting that it improves the consumer's standard of living. It is also forbidden to emphasize the speed or ease of obtaining a loan.

Every advertisement offering consumer credit must include a clear warning: "Warning! Borrowing costs money" (in Latvian: "Brīdinām! Aizņemšanās maksā naudu"), occupying at least 10% of the ad space. Additionally, credit agreements may only be concluded or modified between 8:00 and 21:00.

Previously, Latvia allowed credit advertising only for business operators, while consumer credit (including credit cards) advertising to private individuals was entirely banned. Other European countries do not have such a ban, making Latvia's regulation stricter than elsewhere.

Arvils Ašeradens (JV), head of the Saeima's Economic Commission responsible for the bill, explained that the initial restriction had a clear goal—to promote responsible borrowing. However, as the economic environment and public financial literacy have changed, and additional borrower protection mechanisms have been introduced, it is time to review the regulation and find a balance between consumer protection and industry competitiveness.