Summary

SMS loans are unsecured instant loans obtained via a text message and are one of the most innovate loan products available in the world today. SMS loans are common in Finland, Sweden, Latvia and Lithuania, and have become highly popular in Estonia over the past few years. In this time, however, irresponsible borrowing and sizeable SMS debts have become a serious social issue Estonia. One source of the problem is that SMS creditors charge significantly higher interest rates than credit institutions under conventional loan agreements.

In this article, the authors examine whether and how it is possible to protect the rights of consumers who have entered into a SMS loan agreement on extremely unfavourable terms. They hypothesize that the rights of consumers can be best protected by raising consumer awareness, increasing the efficiency of the activities of the Consumer Protection Board and amending the definition and applicability of the concept of good morals in civil law.

This article in a revised and expanded version of their article “Protection of Consumer Rights in SMS Loan Agreements” published in English in the European Review of Private Law 2010 (18) 1.