Legal Mechanism for Countering Illegal Activities in the Provision of Consumer Credit: Current State and Prospects for Improvement

Abstract

The high profitability of consumer credit activities, supported by growing demand, has determined the formation of an illegal sector of financial services provided by entrepreneurs on behalf of an individual. Not being among the entities authorized to provide consumer credit services, these persons are not only not burdened with the Bank of Russia control, but are also invulnerable to the law. In order to protect the rights of consumers of financial services, in 2021 the legislator criminalized illegal activities for the provision of consumer loans (loans) (Article 171.5 of the Criminal Code of the Russian Federation) and changed the content of the related Article 14.56 of the Administrative Code of the Russian Federation. Having deviated from the rules of legal writing when formulating Article 171.5 of the Criminal Code of the Russian Federation and burdening the composition with administrative prejudice, without eliminating the reasons for the low effectiveness of the application of Article 14.56 of the Administrative Code of the Russian Federation, the legislator blocked the implementation of Article 171.5 of the Criminal Code in practice. According to the author, the inevitability of administrative liability of illegal creditors can be ensured by excluding restrictions on the subject from Part 1 of Article 14.56 of the Administrative Code of the Russian Federation, as well as changing the approach to determining the end of the specified offense, linking it not with the date of conclusion of the contract, but with the date of presentation by the creditor of documents for the organization of enforcement of court decisions on debt collection. The implementation of administrative responsibility, as well as a change in the judicial practice of debt collection in favor of the pawnbroker, which excludes the «interests» of the illegal creditor from the sphere of state protection, will prevent illegal actions in the financial market, and eliminate the need for a criminal ban. The preservation of the criminal act will require changes in Article 171.5 of the Criminal Code of the Russian Federation, the author’s version of which is proposed in the paper.