BC-Supreme Court of Ukraine “forbade” Privat to collect % and fines on credit cards

By its decision in case No. 342/180/17 of 03/07/19, the BC-Supreme Court of Ukraine “broke” the established judicial practice on the collection of overdue debt on PrivatBank credit cards!

From this date, the terms and conditions for the provision of banking services posted on the pages of the PrivatBank website:

1. Are not considered a public offer and, accordingly, an integral part of credit agreements.
2. The signing by the borrower of the application at the bank branch does not automatically attach it to these conditions, as it was before.

The reason for the formation of a completely new approach to the consideration of such disputes was the case of a PrivatBank client!

She, not wanting to pay an exorbitantly large fine, challenged the legality of the terms and conditions of the site, as part of a loan agreement concluded by signing an application form, in which there was not a word about % for the use of funds and about liability in the form of a penalty (penalty) for violation terms of fulfillment of obligations.

“The subject of the proceedings was the collection of debt in favor of the bank under a loan agreement by the respondent signing an application form for joining the Terms and Conditions for the provision of banking services, on the basis of which a loan (credit limit) in the amount of UAH 20,000 was obtained.”

The bank went to court to solve the problem with late repayment of the debt!

In the statement of claim, he asked to recover from the debtor almost 50 thousand hryvnyas, of which: 16 thousand – the debt on the body of the loan, 5 thousand -% for use and almost 27 thousand of penalties and fines.

The court of first instance, together with the appeal, satisfied the bank’s claim in part!

Were recovered: the body of the loan, interest and a reduced portion of the penalty. The court reasoned the decision simply: “The money was received, but not returned, therefore, it is subject to collection, with the exception of a penalty that is greater than the debt itself”!

The cassation consideration changed the judicial practice in such cases!

BC-SCU took as a basis the argument of the bank’s client that she did not sign the Terms and Conditions, on the basis of which the bank can independently establish and change the credit limit and credit conditions.

The SCU established the following:

1. The agreement was concluded on the basis of an offer agreement developed by PrivatBank. By law, the terms of this document must be clear and transparent to the consumer, but there are no conditions in the application for accession regarding the interest rate and liability for late payments.
2. The bank indicated that the conditions containing information about the% rate and penalties are located on its official website and are an integral part of the disputable agreement.
3. The application form does not contain information that the borrower is familiar with the conditions that are posted on the above Internet resource of the lender, therefore, the court cannot regard them as a legal fact.
4. The bank changed the conditions more than once, posted on the website, in view of this, it could provide the court with a copy of the most “convenient” for the borrower, which indicates that the specific conditions for a particular client signing the application form are not confirmed, since on the copy of the conditions in the materials the case is not signed by the borrower.

These facts, taken together and separately, indicate the need to improve the mechanism for protecting consumer rights through the courts in this area of ​​credit legal relations.

Therefore, BC – Supreme Court of Ukraine canceled the decisions of the courts of the previous instances!

Only the principal amount remained subject to collection, since:

1. An ordinary citizen-consumer of banking services with an ordinary level of education and a philistine level of legal literacy cannot effectively exercise his right to information about the services he receives in such conditions.
2. Terms and Conditions on the bank’s website – a voluminous document relating to all aspects of banking activities, the study of which takes considerable time and for its interpretation you need specialized knowledge or the help of a lawyer, which makes it impossible to understand its relationship with a specific type of agreement.