The Bottom Line
- Consumer Home-Court Advantage: Businesses operating across the EU can be sued by consumers in the consumer’s home country, regardless of a “choice of court” clause in your standard terms and conditions.
- Justify Every Deduction: Financial service providers must be prepared to provide a clear, specific, and documented justification for any deductions or chargebacks from a customer’s account. Vague references to “standard procedure” will not hold up in court.
- The Risk of an Unsubstantiated Defense: Failing to adequately explain your actions, even in a small-claims case, can lead to a ruling against you. This sets a poor precedent and can damage your brand’s reputation.
The Details
In a recent case, the District Court of North Holland delivered a sharp reminder to international businesses about the limits of their standard terms and conditions when dealing with EU consumers. The case involved a Dutch resident who sued the Brussels-based financial technology company Wise over funds deducted upon the closure of his multi-currency account.
Wise attempted to dismiss the case, arguing that its user agreement contained an exclusive forum-selection clause designating Belgian courts as the sole venue for disputes. The Dutch court flatly rejected this argument, citing the EU’s Brussels I-bis Regulation. This regulation grants consumers a protective right to bring legal action against a company in the courts of their own member state—a right that cannot be signed away in a standard contract before a dispute arises.
The dispute itself centered on a £130 chargeback that Wise processed after closing the customer’s account. Because the account no longer held a sterling balance, Wise converted funds from the customer’s Euro and US Dollar balances to cover the amount. The customer challenged this, claiming it was an unauthorized transaction. The court found that while Wise’s terms and conditions generally allowed for such reversals, the company failed to provide any specific justification for this particular action.
The decisive factor in the court’s ruling was Wise’s failure to substantiate its defense. The company did not provide the customer, or the court, with any insight into the basis for the chargeback, the exchange rates used, or the calculation of the final settlement amount. The court ruled that merely stating it was a “standard chargeback process” was an “insufficiently motivated” defense. Lacking a proper explanation for the deduction, the court sided with the consumer and ordered Wise to repay the disputed amounts, plus interest and costs. This case underscores a critical operational and legal principle: transparency and clear documentation are not optional when handling customer funds.
Source
Rechtbank Noord-Holland
