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BANKING

German banks accused of charging ‘illegal’ fees to customers

A year after the German Federal Court of Justice ruled in favour of bank customers in a case centred on consent for banking fees, many credit institutions are still not implementing the decision.

Postbank's General Terms and Conditions (AGB).
Postbank's General Terms and Conditions (AGB). Photo: picture alliance/dpa | Uli Deck

In April last year, the German Federal Court of Justice (BGH) ruled that banks must obtain the explicit consent of their customers when making changes to their general terms and conditions.

Most significantly, this meant that banks have to ask their customers for consent to being charged fees, and that customers can reclaim fees that have been charged without their explicit agreement.

READ ALSO: Why a German court decision means you could be entitled to compensation from your bank

However, some financial institutions have refused to follow the ruling, leading to thousands of complaints as well as two lawsuits.

The Federation of German Consumer Organizations (VZBV) has filed claims against two savings banks on behalf of several hundred consumers, who complain that the banks continued to increase fees after the court ruling.

The VZBV says that consumer centres across Germany received at least 3,200 complaints between June 2021 and February 2022 and a further 4,600 consumers sought advice from experts.

READ ALSO: ‘Move into this century’: How Germany could improve its banking system

In some cases, customers who reclaimed charges also had their accounts terminated or were threatened with termination. In others, consumers complained that they felt pressured and coerced into agreeing to new General Terms and Conditions.

The Baden-Württemberg consumer centre called the banks’ behaviour a “brazen and, in our opinion, illegal attempt” to prevent bank customers from asserting their rights.

The consumer advice centre in Baden-Württemberg is itself taking legal action against a total of five banks for various reasons in connection with the implementation of the BGH ruling.

In two cases to date, the consumer advocates have been unsuccessful in the Regional Court of Stuttgart and have lodged appeals.

The financial supervisory authority is also monitoring the implementation of the ruling very closely and is leading discussions “with institutes, which became conspicuous in connection with the implementation of the judgement”.

READ ALSO: Why bank customers in Germany are facing higher fees

Last October, the supervisory authority had already warned the financial institutions that they should heed the ruling of the decision.

On the other hand, banks and savings banks, complain that “obtaining the consent of customers in mass business involves an enormous amount of additional work for both contracting parties.”

Deutsche Kreditwirtschaft – the umbrella organization of the five major banking associations in Germany – said that many customers are not used to having to respond to requests to agree to changes in their contracts.

“Credit institutions therefore have to follow up with their customers in quite a few cases,” they said.

Vocabulary

bank fees = (die) Bankgebühren

court = (das) Gericht

legal action = (die) Klage

judgement = (das) Urteil

consumer advice centre = (die) Verbraucherzentrale

We’re aiming to help our readers improve their German by translating vocabulary from some of our news stories. Did you find this article useful? Let us know.

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CRIME

Online banking fraud at all-time high in Germany

Victims of internet password fraud rose significantly in the last year, with so-called online "phishing" up by 25 percent, the German Association for Information Technology, Telecommunications and New Media (BITKOM) reported on Tuesday.

Online banking fraud at all-time high in Germany
Photo: DPA

Fraudsters skimmed €19 million from internet bank account users in more than 4,100 incidents last year.

“Password theft has reached an unsurpassed high point due to ever-more sophisticated fraud techniques,” said BITKOM chairman Dieter Kempf.

But numbers for 2008 may allow for a trend reversal. “The data for the first part of the year lead us to expect that the number of victims will fall considerably,” he said.

BITKOM reports that fraud methods have gotten more efficient. Internet imposters forgoing typical phishing emails that lead to false bank websites – the organization estimates that now at least three of four crimes stem from Trojan horse programs sent via email. These programs record passwords and secretly forward the information to the hackers.

Another method secretly transfers an online bank user to a false website, BITKOM said.

BITKOM represents more than 1,200 technology, telecommunications and new media companies in Germany.