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EuGH Orders Banks to Immediately Refund Customers After Fraud

The court places the initial financial burden on banks and allows them to reclaim money only if they can prove intentional wrongdoing or gross negligence.

Overview

  • The European Court of Justice ruled on Thursday, October 15, 2026, that banks must promptly refund customers for losses from unauthorized payments once customers notify them without undue delay.
  • After making an initial refund, a bank may seek to recover the sum only if it proves the customer acted intentionally or with gross negligence, shifting the burden of proof onto the bank.
  • The judgment creates a single narrow exception that lets a bank withhold repayment only when it has justified reasons to suspect the customer of committing fraud and the bank notifies the competent national authority in writing.
  • The ruling stems from a Polish phishing case in which a customer lost about €700 after entering credentials on a fake website, and the Polish court must now apply the EuGH decision to the original dispute.
  • Consumer groups say the decision should reduce costly lawsuits and change how banks handle fraud claims across EU states by moving short-term financial risk to banks and prompting new national guidance and procedures.