Advertising for interest
Consumer center sues Neobroker Trade Republic
The Berlin online broker advertises on the checking account with high interest rates. However, the company is misleading, criticizes the Baden-Württemberg consumer center. She warns customers of possible losses.
The Baden-Württemberg consumer center is in court against the Neobroker Trade Republic. On Friday before the Berlin II Regional Court, a lawsuit was submitted against the company for “misleading advertising” about the high interest and statements offered by the company, the consumer advocates in Stuttgart said.
Trade Republic advertised online with the fact that customers would get interest of 3.0 percent “unlimited” to the checking account, protected by the statutory deposit insurance, according to the consumer center. However, Trade Republic does not adequately point out that the interest rate is changeable and that the credit is not completely subject to the deposit insurance, but also also invested in money market funds.
Such funds invest in short -running bonds and terminals. They are considered conservative and are often used by large investors. While the money that is at partner banks through the statutory deposit guarantee up to 100,000 euros is not valid for investments in money market funds, Niels Nauhauser, financial expert at the Baden-Württemberg consumer center criticizes. “Trade Republic accuses security of advertising and the statements on the deposit protection that is not given.”
Trade Republic defends itself
The company defends itself against the allegations. Trade Republic rejected a previous warning from the consumer center a few days ago. “The diversification of customer deposits to several partner banks and in qualified money market funds is not an innovation, but has already been introduced at the end of May 2024. Since then, all customers in the app have been able to view transparently at any time, as their cash credit is distributed.” The allegations in no way covered the feedback from customers.
The Berlin neobroker, which is particularly popular with young people, advertises that he is passing on the deposit interest rate of the European Central Bank one to one to savers – currently 2.75 percent. This makes Trade Republic significantly higher than what most banks pay on the overnight money. Trade Republic has around eight million customers and manages assets of over 100 billion euros.
Consumer advice center warns of losses
Nauhauser accuses the company Inbansansm: Trade Republic claim that the credit is distributed to partner banks and protected as a “contribution” per account and customer with up to 100,000 euros. It was only in the app that consumers would be a hint that their money would also be invested in money market funds.
Trade Republic also rejects this: Not only in the app, but also on the main page of the website and in the Help Center, a detailed explanation is available. “To what extent the consumer advice center fulfills the order of consumer protection must be questioned.”
According to consumer advocates, a negotiation date has not yet been determined.
dpa
Source: Stern
