The EU Court of Justice has ruled that banks must first refund victims of account fraud immediately, even if they accuse the customers of gross negligence. After refunding, the payment service provider can reclaim losses caused by the customer's gross negligence, according to a Court statement from Luxembourg, bnn.de reported.
One exception for suspected customer fraud
Under EU law there is only one exception, bnn.de reported. It applies where there are grounds to suspect the customer of fraud and the bank notifies the competent national authority in writing.
The case arose from Poland, where a bank customer fell victim to phishing fraud. The fraudster obtained her data and transferred about 700 euros to his own account.
The bank refused to refund the money, saying the woman had enabled the fraud through gross negligence.
Polish referral and German practice
A Polish national court referred the matter to the Court of Justice, according to the Court. It asked whether a bank, as a payment service provider, must refund an unauthorised transaction immediately even if it considers the customer grossly negligent, or whether it can refuse the refund on that ground.
Advocate General Rantos had earlier given an opinion reaching the same conclusion: refund first, unless fraud by the customer is suspected. Paperjam reported that the opinion was not binding on the Court.
According to an expert at the vzbv consumer federation, banks in Germany follow a similar practice to the one seen in the Polish case, bnn.de reported.
Sources: bnn.de, en.paperjam.lu, curia.europa.eu