The qualification of the unauthorised payment transaction

In a decision dated 30 November 2022, the Commercial Chamber of the Court of Cassation clarifies the definition of the notion of authorised transaction under the Monetary and Financial Code.[1]

Court of Cassation, Commercial Chamber, 30 November 2022, n° 21-17.614

The litigation surrounding payment instruments with personalised security data – such as credit cards – is particularly rich. However, decisions on this subject are rarely published.

In this judgment, published in the 30 November 2022 edition of the selective Lettres de Chambres, the Court of Cassation rules in favour of the victim of a theft during a bank withdrawal.

The case starts with a simple physical withdrawal of cash. After the customer has inserted his bank card and entered his secret code at an ATM, a third party withdraws 900 euros without his knowledge. The secret code was entered by the customer but not the amount, which the thief entered himself.

The customer then applies to his bank for a refund, which the bank refuses. After amicable negotiations failed, the case went to court.

On 7 May 2021, the Paris judicial court rejected the customer’s request for reimbursement, considering that it was not a fraudulent withdrawal – engaging the bank’s responsibility and therefore justifying reimbursement by the bank of the sum stolen – but rather a classic cash theft.

As the dispute only concerns a sum of 900 euros, the client cannot appeal against the court’s decision (pursuant to Article R. 211-3-24 of the Judicial Organisation Code). An appeal in cassation is therefore lodged. The client complains that the court violated Articles L. 133-18 and L. 133-19 of the Monetary and Financial Code, which require the bank to reimburse unauthorised transactions quickly.

Is the operation allowed or not in this situation?

In other words, can the transaction be considered “authorised” if the customer enters his or her bank card code at an ATM and then a third party dials the amount and takes the notes? To answer this question, the Commercial Chamber invokes Articles L. 133-3 and L. 133-6 of the aforementioned Code. The solution is not clearly stated. The Court thus combines the two articles to deduce that a transaction is authorised “only if the payer has also consented to the amount of the transaction”; a clear and precise answer that deserved to be published.

To summarise, a cash withdrawal from an ATM can only be considered an authorised transaction within the meaning of the Monetary and Financial Code if it meets two cumulative conditions: the customer has entered his or her secret code and has indicated the amount of the withdrawal. The Court adopts a decidedly consumer-friendly approach here.

The rest of the judgment is quite logical. Since the transaction was considered unauthorised in this case, the protective legislation set out in Articles L. 133-24, L. 133-18 and L. 133-19 of the Monetary and Financial Code should have been applied by the court. The bank should have refunded the customer. The judgment is therefore quashed for error of law.

This decision echoes a judgment of 9 February this year on substantially similar facts, but in which the Commercial Chamber merely quashed the decision on the grounds that it lacked a legal basis. [2]. The contested decision did not actually identify whether the transaction was authorised or not. However, this is an essential step before considering the potential liability of the client.

[1] See also on this judgment: Cédric Hélaine, “De l’art de qualifier une opération de paiement non autorisée”, Dalloz Actualité, 6 December 2022.

[2] Court of Cassation, Commercial Chamber, 9 February 2022, n°19-23.886