The Ukrainian banking system is experiencing difficult times. A large number of borrowers are not willing to settle their credit indebtedness. To avoid civil responsibility for defaulted loans borrowers resort to various schemes. Recently one of the types of credit card frauds is gaining popularity among credit card holders.
This situation must be considered as from the point of view of the banks, as well as from the point of view of the clients who incurred losses from actions of the lawbreakers.
If the bank untimely credits monetary sums, transferred to the client, onto the account of such client, unfoundedly writes off such sums from the client’s account or violates the client’s order, such bank, after discovery of the violation, must immediately credit the corresponding sum to the account of the client or the account of the valid recipient, settle interests or compensate losses, unless the current laws stipulate otherwise.
The Law of Ukraine “On payment systems and transfer of monetary assets in Ukraine” stipulates as follows. If initiation of an improper transfer from the account of an improper payer (through the fault of the transfer initiator not being the payer) occurs, the issuer in charge is obliged to transfer to the account of an improper payer a corresponding sum of its own monetary assets, as well as settle the fine to the improper payer in the amount of 0.1 % of the sum of the improper payment for each day, starting from the day of improper transfer till the day of reimbursement of a corresponding sum to the account unless a larger sum of the fine is stipulated by the agreement.
It means that if the bank executes banking client account operations which the client did not initiate (withdrawal of cash from the cash machines, purchase of products through the Internet or at the supermarket), the bank must reimburse the client for the credited money or settle a fine to the client.
Everything seems to be simple, but there are people who will always wish to take advantage of the client’s mentioned right and correspondent obligation of the bank to receive the money and avoid returning them.
There were instances when card holders withdrew money themselves (or with assistance of other persons) and later filed claims to the bank on reimbursement of these sums to their bank credit account. These persons insisted that they did not initiate the operation and that it was the fault of the bank and of third persons that their money was withdrawn.
Sometimes the bank receives information that the client had not allegedly carried out such operations only after filing the claim on recovery of the credit indebtedness. The court practice relating to issued like these is not uniform. Everything depends on the evidence which the parties submit in confirmation of their claims and objections.
In its Decree No. 6-71цс15 the Supreme Court noted: by having not established the circumstances which indisputably prove that the card holder had (by his actions or inaction) encouraged the loss, unlawful use of the PIN-code, or other information, which allows initiating payment operations the cassation court made an erroneous conclusion about guiltiness of the person as the basis for civil responsibility.
If we treat the situation on the bank’s part it is noted that if the person has immediately informed the bank that he/she had not initiated any operations with his/her account, the bank is obliged to transfer the money which was deducted from the account.
If the bank does not perform the mentioned operations and files a claim to the court on recovery of money, or, visa-versa, when the client files a claim to the court against the bank on recovery of his money, then, regardless of the mentioned court conclusion, in order to recover and avoid paying any monetary sums the bank must prove that it is the client who is guilty of initiating the unlawful operation.
How can the bank prove that the client encouraged the loss, unlawful use of the PIN-code or other information which allows initiating payment operations?
In these circumstances the fault will be with bank in any case, because in these categories of cases the courts place the burden of proving the bank clients’ guilt onto the banks, although these are relations of civil nature.
Where is the competitiveness and equality of parties then?
If the bank maintains security systems and reliable protection procedures what would a bank’s client submit himself as an evidence of his non-disclosure of his PIN-code?
The court ruling must have a substantiation, i.e. be based on evidence. If the client fails to submit proof of non-disclosure of its PIN-code to third persons, such decision will be bases on a suggestion which is unacceptable.
There is also a question about unreasonable application by the courts of the Law of Ukraine “On payment systems and transfer of monetary assets in Ukraine” towards legal relations when payment operations were carried out abroad.
Preamble of the law clearly states that this law defines the general principles of functioning of payment and settlement systems in Ukraine, the definition and general procedure of transfer of assets in Ukraine, establishes responsibility of the persons initiating the transfers, as well as defines the general procedure of performing supervision over the payment systems. However, the courts do not pay attention to the said provisions and actually copy the legal conclusion of the Supreme Court. By the way, in its Decree as of May 13, 2015 the Supreme Court did not clarify how the Law, which must be applied towards transfers within Ukraine, was applied to the banking operation carried out in Thailand.
Unfortunately, the courts in Ukraine remember only about practices of the Supreme Court which in their interpretation is rendered as “compulsory”.
However, they forget about the right stipulated by Civil Procedure Code to withdraw from the legal position provided in the conclusions of the Supreme Court with simultaneous provision of corresponding motives.
It is hard to find a weighed solution to the situation similar to this one. It remains to hope that the courts will consider each particular case in detail and will strictly review provision of evidence by which the bank clients substantiating their legal position.