Banks must refund unauthorised payments at once, but not all fraud cases are covered
A European Union Court of Justice ruling requires banks to refund unauthorised payments to customers immediately. The first claims have already been filed in Latvia, but the rule does not cover cases where the person approved the transfer themselves.
A European Union Court of Justice ruling opens new possibilities for victims of financial fraud to recover lost money, according to 360TV Ziņas. If a payment was unauthorised, the bank must refund it to the customer immediately and may only then demand the money back if it proves gross negligence by the client. Latvia's Ministry of Justice confirms that the ruling is directly binding on Latvian institutions as well.
The Polish case
The ruling came in a case from Poland, where a woman lost about 700 euros after opening a fake link. The court concluded that a bank's reference to customer negligence is not enough to refuse an immediate refund.
First claims in Latvia
Sworn advocate Lauris Klagišs says the first victims have already approached him. He has submitted two claims to banks, both involving customers of SEB bank who lost several thousand euros. The banks said they cannot decide right away and need at least a month. The lawyer notes that millions are stolen through fraud every month, so the number of potential claimants could be large. Latvian bank customers lost 10 million euros to fraud this year through September.
Klagišs stresses that the new procedure shifts the burden of litigation from the individual to the bank: it must decide whether to go to court and spend money, resources and time on a claim.
An important distinction
Edgars Pastars, adviser at the Finance Latvia Association (the financial industry body), urges caution. He explains that the rule applies to unauthorised payments, not to cases where a person approved the transfer to a fraudster themselves. When a customer reports fraud, the bank checks in its system whether the payment was authorised. If it was not, the bank compensates the customer and investigates whether there was gross negligence; if so, it reclaims the money from the client. If the payment was authorised, the bank rejects liability and the customer can take the bank to court.
How the mechanism will work in Latvian practice should become clear in the coming months, as banks review the first claims.
