French court rules against bank in fraud case

A French court has ruled that the bank Qonto must compensate a company executive for losses caused by a fraud involving a fake bank advisor. The executive was tricked into making fraudulent payments after receiving a deceptive SMS and interacting with a scammer posing as a fraud prevention advisor.

Fraudulent transactions and strong authentication

The victim made 37 fraudulent transactions, including 33 card payments within less than two hours, resulting in a loss of 105,586.07 euros. Despite using strong authentication to validate the payments, Qonto refused to reimburse the stolen funds, arguing that the customer had personally authorized the transactions.

Legal reasoning and liability

The court ruled that the use of strong authentication did not exempt Qonto from liability. It emphasized that a payment is authorized only if the payer has given consent, but a bank can still be held responsible if it failed to detect obvious irregularities in the transactions.

Unusual circumstances and duty of vigilance

The court highlighted several unusual aspects of the case, such as the rapid frequency of payments, identical transaction amounts, and beneficiaries not previously linked to the account. These anomalies should have triggered Qonto’s duty of vigilance, overriding the principle of non-interference in customer transactions.

Compensation and legal implications

The court ordered Qonto to pay 63,351.64 euros, along with legal interest and additional fees. It noted that Qonto did not take steps to recover the funds or block the transactions, which contributed to the loss. This ruling does not guarantee automatic reimbursement for all fraud cases but sets a precedent for victims to seek compensation based on specific circumstances.

Significance for fraud victims

The decision by the Paris Economic Activities Tribunal is significant for victims of bank fraud, emphasizing that a bank’s failure to detect suspicious activity can lead to liability. It does not make banks universally responsible for fraud but shows that victims can pursue legal action under certain conditions.