Smartphone bank closes multiple accounts without notice

Smartphone bank closes multiple accounts without notice

frankfurt The most valuable German fintech is at risk of new trouble: customers are outraged because their N26 account was abruptly terminated. No transfers, no cash withdrawals: Handelsblatt is aware of cases of 40 users based in Germany who haven’t had access to their accounts since last Thursday. There are also many complaints on Twitter from customers in France and Italy.

Customers have received the same letter from the online bank, stating that N26 has detected a breach of terms and conditions on the account in question. “Therefore we announce the extraordinary termination of your N26 account.”

The notice is given in accordance with the “Basic Rules for the Relationship between the Customer and the Bank”. Termination comes into force with immediate effect.

Niels Nauhauser from the Baden-Württemberg Consumer Advice Center criticizes: “In the letter of termination, N26 refers to a violation of the General Terms and Conditions, but does not provide information on what specific violation the customer has been accused of. ”

Termination without notice is possible only for good reason as per the stated terms and conditions. “In the event of a breach of contract, the bank should give its customers time to resolve the situation according to their own terms and conditions,” Nauhauser said.

In fact, the Bank’s Terms and Conditions contain a 14-page document on the subject “Basic rules for the relationship between the customer and the bank”. Accordingly, termination “for good reason without complying with the notice period” is permissible only for three reasons: if the customer has provided false information about his financial position, if there is or is likely to be a significant deterioration in his financial position. is threatened, or if the customer fulfills his obligation to place an order or strengthen his position of collateral within a reasonable period prescribed by the Bank.

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Among those affected is Alex K.*. He is a customer of N26 for one and a half years. He told that on Thursday morning he bought a sandwich from his account. In the afternoon he could not access his account.

Proof of Origin of Requested Money

Some customers who were still able to log in to their account also say that N26 withdrew the full amount from the account. The same is true for Lars P*. All his money on Friday is N26. belonged to His account has been debited. Today he received a message from Smartphone Bank: His current balance is not sufficient to cover pending debits.

Of course, P. has to continue paying his running costs, but he doesn’t have much money in his account because of the N26 debit. If the transaction is declined, it will be charged, the N26 message said. And if the account turns red again, overdraft interest will also be payable. Where exactly the debited money was transferred is not clear.

At Handelsblatt’s request, N26 said: “If we detect unusual activity or violate our terms and conditions, sometimes we have to freeze or close accounts. The specific reasons behind those closures However, on rare occasions when they close the accounts, they will notify the concerned customers directly. The smartphone bank said that very few accounts have been affected.

In its letter to at least some of the customers, Neobank also states that it is not currently possible to pay off the remaining account balances. “Please send us proof of origin of funds in the form of appropriate documents.” The bank will then “re-check” the payment of the balance.

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The wording suggests that the mass layoffs are related to N26’s attempt to establish better money laundering controls. Proof of origin of funds is usually required in relation to money laundering and fraudulent account activity.

“At the same time, the accumulation of cases, even among some long-term customer relationships, shows that the termination action is not due for regular review,” Nauhauser says.

Baffin takes the N26 on a short lease

Over the past two years, N26 has apparently had huge problems with accounts that criminals can use to smuggle their illegally obtained funds overseas. Last summer, Handelsblatt reported a list of approximately 1,600 NeoBank accounts that were opened between May 2019 and July 2021 and were apparently used for counterfeit shops or fraudulent eBay accounts on the Internet. Obviously, the N26 struggled for a long time to correctly identify new customers.

German financial regulator BaFin then limited the growth of new clients on the N26, and the Italian regulator also barred new clients in March. These restrictions will be eased only if fintechs can show progress in preventing money laundering.

The N26 is thus under pressure to resolve its regulatory issues quickly in order to grow again. In recent months, the company had invested heavily in improved security practices and hired employees for them.

The wording from the customer letter may indicate that N26 is now searching its customer base for potentially suspicious accounts too broadly in order to address its problems and will give a lot of notice.

“We advise those affected to ask the bank to state the specific grounds for the termination claim and the alleged breach of duty,” says Nauhauser. If the termination turns out to be unreasonable, there may be claims for damages. In this case, those affected should document the damage caused according to Nauhauser.

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*name changed

More: Italy’s financial regulator has issued N26 . Banned new customers for

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