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22 september 2023, 01:29
The Financial Ombudsman has recovered from a bank, in favour of a consumer, funds debited from the consumer’s accounts without the consumer’s order. The First Instance Court set aside the Financial Ombudsman’s decision. On appeal, the First Instance Court’s decision was overruled and the FOS decision was upheld.
Gist of the Case
A Moscow resident appealed to the Financial Ombudsman with a claim for recovery of funds unlawfully transferred from his accounts to the third party accounts.
In November 2018, the consumer became a bank client, having entered into a comprehensive service agreement, under which an account was opened and the use of online banking was provided for. In February 2019, the consumer received a credit limit of 300 thousand roubles, the bank issued a card and opened another account for him. On the night of 21 July 2021, the online bank system was logged in and several transactions were made to transfer a total amount of 80 thousand roubles from the consumer’s accounts. At the same time, a new Smartphone – iPhone 5S – was linked to push notifications.
After the transactions, the bank sent a message to the consumer that for the security of funds the card/account transactions were restricted online. To remove the restrictions, one had to call the bank. After this message, a few more transactions were made and a further 157,000 roubles were debited.
The bank replied to the Financial Ombudsman’s enquiry that the message had been sent to the applicant’s phone number due to the rejection of an operation identified as suspicious by the intra-bank system. In such a case it is a matter of blocking a specific operation which does not mean blocking of cards or access to the applicant’s remote service system.
When contacting the Financial Ombudsman, the consumer argued that neither had he made the disputed transactions, nor had he consented to them. In addition, the consumer pointed out that he did not own the iPhone 5S mobile device nor had he performed authorization procedures in the online bank using the said device.
The Financial Ombudsman’s position
Financial Ombudsman Tatiana Savitskaya concluded that the text message about blocking the account operations sent to the consumer, as well as the documents submitted in the appeal file confirm that the bank should not have carried out further operations on transferring funds from the account.
Thus, the rules of the banking service agreement stipulate that the bank should suspend the execution of the order to carry out an account transaction for up to two working days in case of detection of an account transaction that corresponds to the signs of money transfer without the client’s consent. Further, the bank is obliged to send a text message to the customer, thus immediately notifying of the suspension of execution of the order, and to request the customer to confirm the resumption of execution of the order.
The customer may confirm the resumption of execution of the order at the bank office or by telephone, but upon satisfactory identification, authentication. “At the same time, the financial institution did not provide information and documents confirming the removal of restrictions and resumption of execution of money transfer orders,” the Financial Ombudsman said.
Under such circumstances, the Financial Ombudsman concluded that the financial institution had failed to take the necessary actions required by the rules of the agreement to suspend the execution of transaction orders for a period of up to two working days. In addition, the provisions of the Russian Federal Law of 27.06.2011 No. 161-FZ “On the National Payment System” (hereinafter referred to as Law No. 161-FZ), which also establishes requirements for the bank to suspend the execution of transaction orders, had been violated.
As a result, the Financial Ombudsman recovered 157 thousand roubles in favour of the consumer, as well as the bank’s commission for making transfers amounting to 8,893 roubles.
The Court’s position
The Kuzminsky District Court of Moscow, referring to Article 8, paragraph 5.1 of Law No. 161-FZ, concluded that the bank had blocked not the entire account, but only a single transaction made without the consumer’s consent. Consequently, further operations were carried out lawfully. But the Moscow City Court upheld the Financial Ombudsman’s appeal, overturned the Court’s decision, upheld the Financial Ombudsman’s decision.
The Moscow City Court’s ruling states that the bank unreasonably failed to take actions to suspend the execution of orders to conduct transactions on bank accounts for up to two working days after signs of a suspicious transaction had been identified. The transactions on behalf of the consumer were being carried out at night (from 01:30:38 hrs to 06:17:52 hrs) with great intensity. At 03:05:23 hours, a transaction was detected that met the indications of suspiciousness and which was not confirmed by the consumer. The bank did not have sufficient grounds to continue the execution of money transfer operations from the consumer’s account without suspending the execution of further orders and without requesting additional confirmations. Furthermore, it is not evident from the text of the bank’s message to the consumer that the restrictions were only imposed in relation to one transaction.
Under such circumstances, the Court Board concluded that the first instance court had not had sufficient grounds for cancelling the Financial Ombudsman’s decision and refusing to satisfy the consumer’s claims.
