French banks must now pay a penalty for every day that they do not reimburse customers who fall victim to fraud, if the bank can be deemed responsible for the loss.
This relates to cases which did not occur through customer negligence – such as them leaving their bank card lying around in public. This is not necessarily a straightforward point, though, as some scammers use clever methods to steal or trick bank details from people.
The new law was introduced on August 3 as part of the government’s raft of measures to help people deal with the rising cost of living.
The banks should, if responsible for the fraud, reimburse customers immediately or at the latest by the end of the first working day of the following week.
For every day after this, they must pay a penalty sum to customers, with the amount calculated on the basis of the legal interest rate of 3.15%.
After the first day the bank is late the fine will be based on a rate of 8.15%, five percentage points above the legal interest rate. This will rise to 13.5% after seven days (10 percentage points about the base rate) and 18.15% after 30 days (15 percentage points about the base rate).
To give an example, a customer has had €4,000 stolen through fraud and the bank is 25 days late in repaying them – this is the average delay, according to the consumer group UFC-Que Choisir.
The fine the bank will have to pay will be just under €37, based on (€4,000 x 25 x 0.1315) / 365.
Matthieu Robin, in charge of the financial sector at UFC-Que Choisir and who came up with the idea for the fine, said he was satisfied.
“Even if these sums do not represent a very high amount for a bank, collectively they would be extremely dissuasive,” he told Capital.
Banks still avoid reimbursing customers
Despite the new law, there is no guarantee that a bank will reimburse a customer who falls victim to financial fraud.
Around one in six frauds are not reimbursed by banks, which is the equivalent to around 250,000 cases a year as there are approximately 1.5 million bank frauds annually, UFC-Que Choisir states.
This is because the banks sometimes claim that the fraud is the result of customer negligence and is not their responsibility.
Article L133-16 of the Monetary and Financial Code states that "the payment service user (bank customer) shall take all reasonable steps to preserve the security of their personal security data”.
If it is deemed that the customer is at fault for the fraud and that the bank did everything in its power to prevent it, then the bank can argue that it is not responsible and does not need to reimburse the customer for the loss.
This can sometimes mean the customer losing out on a substantial amount of money.
Of the 4,300 cases UFC-Que Choisir investigated of a bank refusing to reimburse a customer, 60% involved losses of over €4,000.