2.8 mln Turks in default on credit card debt

The number of customers who failed to pay their credit card debt reached 2.8 million in the third quarter of this year, while the amount of credit card debt that Turks defaulted on increased by TL 465 million compared to the last quarter and totaled TL 5.76 billion, recent reports from the Banking Regulation and Supervision Agency (BDDK) and the Turkish Banks Association (TBB) have shown.

A prolonged drought this summer led to an increase in the prices of almost all food products and triggered a hike in inflation rates for three consecutive months. Even though a slight decrease in the consumer price index (CPI) was observed in September, it rose again in October. In parallel with these developments and consumers' reduced purchasing power, the volume of unpaid credit cards continued to rise in the third quarter. While the amount of credit card debt was TL 5.29 billion by the second quarter, it surged by TL 465 million and reached TL 5.76 billion in the third quarter. In addition, the total number of people who failed to their pay credit card debt reached 2.8 million in the same period.

Speaking to Today's Zaman, Mehmet Bülent Deniz, the chair of the Federation of Consumers Unions (TBF), stated that the federation has been warning consumers and the authorities about an explosion of bad loans and unpaid credit card debt in the country since June. Mentioning the banking law on bad loans, Deniz said banks are obliged to launch legal proceedings if consumers do not pay their balances within 90 days, adding that the recent figures are a result of the latest hikes in the price of electricity and gas and increasing inflation rates 

According to Fatih Macit, a professor of economics at İstanbul's Süleyman Şah University, the inflation rate that surpassed government expectations in recent months also played a crucial role in the upward trend in the volume of unpaid credit card debts. Macit said the government had estimated the inflation rate to be around 5 percent at the beginning of this year, adding that it recently revised the rate to 8.9 percent.

Underlining that the annual increase in the price of food products was 12.6 percent in October, Macit argued that these developments in the inflation rate yielded a considerable decrease in the purchasing power of consumers.

Today's Zaman, 10 Kasım 2014 http://www.todayszaman.com/business_28-mln-turks-in-default-on-credit-card-debt_364029.html

Consumer rights worse despite new legislation, associations say

Leaders from Turkey's Consumers Association (TÜDER) and Consumers Union (TB) have marked consumers' week in Turkey by saying that consumers' rights in the country are now worse than they were before the implementation of new consumer protection laws in November 2013.

 

The week from March 15 to 21 is designated consumers' week in Turkey, with the intention of informing citizens of their rights as consumers, what they can do to protect these rights and which institutions can offer them guidance. These rights are inspired by the United Nations Guidelines for Consumer Protection and include the right to access information, the right to be educated about consumer rights, the right to return damaged goods and the right to protection of economic interests.

This year, associations such as TB and TÜDER have chosen to inform the public that their consumer rights are still being violated, despite the legal changes in 2013. Bülent Deniz, the head of TB, told Sunday's Zaman that “in Turkey, 'consumer rights' is an expression with no substance.” He gave the state of the Banking Regulation and Supervision Agency (BDDK) as an example. “At least one member [of the BDDK] should have been assigned by law to protect consumers' rights. But instead, all the members present at the institution represent producers or are dealers' representatives,” Deniz said. “This is a total embarrassment.”

Deniz emphasized that one of the most difficult relationships for consumers is with banks, because of their ruthless and inconsiderate attitudes. “I sued my bank in 2007 for the TL 20 they illegally charged me as a subscription fee. I won the case and, after that, thousands of other consumers filed lawsuits,” according to the TB head. In Turkey, banks can charge consumers for 62 different transaction costs, including “SMS message fees, bank statement fees, subscription fees and balance inquiry fees,” Deniz claims.

Hayati Yazıcı, customs and trade minister, presented a bill to Parliament in July 2013 which aimed to prevent banks from levying these fees. However, Parliament decided to make it legal for banks to charge those fees, thus benefitting powerful institutions instead of individual consumers. “Consumers were better off before Yazıcı decided to relieve them of the unfair costs [that banks charge]. At least they could have gone to court and won their cases. Now, they cannot even do that,” Deniz claimed.

The status of consumer protection laws could be confusing for anyone who is not an expert in law or economics. In November 2013, a number of Turkish dailies announced that the implementation of the law was a positive step for consumers. For example, various newspapers said that the period in which a faulty item could be returned had been extended to six months from the previous limit of one month. Turkish media also announced in November that the new law alleviated the burden on consumers in their deals with banks, limiting the reasons banks could bring forward to charge their clients.

Deniz informed Sunday's Zaman that the legal changes made in 2013 did not make conditions very different from the situation that was already in place after the 1995 consumer protection law. “Only that a few technical details have been added in order to make our laws look compatible with EU regulations,” Deniz said. He also highlighted the problems with consumer protection laws in Turkey, saying: “The law says that cases consumers bring to court should be resolved within three months. However, there are cases that haven't been resolved for over two years” -- suggesting that what appears to be the situation on paper might not be the case in reality.

Engin Başaran, honorary president of TÜDER, focused on other problems for consumers in Turkey while speaking to Sunday's Zaman. In addition to unfair charges by banks, she finds that reduced purchasing power, a heavy tax burden and high debt are also problems for consumers that are rising year after year. Nevertheless, Başaran agrees with Deniz that the struggle between banks and consumers has been intensified by the 2013 laws. “It [the relationship between banks and customers] is much worse than it was in 1995 when the previous consumer protection laws were in place,” Başaran confirms. She also admits that she is particularly worried by the fact that the activism undertaken by various consumer associations in the past has largely died.

Complaints about bank accounts and services by clients are an international phenomenon, so one might assume that the worsening situation for consumers is not limited to Turkey. Başaran, however, thinks that the situation is a very Turkish problem. “A country with a free market should prioritize the protection of consumers before all else,” Başaran claims. “The victimization of consumers that takes place in Turkey has no equivalent in developed countries.”

 

Meltem Naz Kaşo, Today's Zaman-16.03.2014

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