Austria: PSP Found To Be Providing Misleading Claims In SCA Case

May 19, 2022
The Austrian Supreme Court has ruled that a payment service provider (PSP) has been using “inadmissible clauses” on payment services, following a case triggered by the Federal Chamber of Labour.

The Austrian Supreme Court has ruled that a payment service provider (PSP) has been using “inadmissible clauses” on payment services, following a case triggered by the Federal Chamber of Labour.

In a case against an undisclosed PSP in Austria, the country’s Supreme Court has ruled that legal clauses that the firm has been using are inadmissible and, therefore, not accepted as valid.

Some of those clauses revolve around strong customer authentication (SCA) and whether the PSP had been misleading to cardholders.

The PSP, according to the court document, operates a credit institution throughout Austria and concludes credit card contracts with consumers using its General Terms and Conditions for Credit Cards.

In this request, the plaintiff requested that the defendant (PSP) be prohibited from using and invoking a total of 22 objected clauses of these General Terms and Conditions as of August 2018, or clauses with the same meaning in commercial transactions with consumers.

Moreover, the plaintiff sought authorisation to publish the judgment in a Saturday edition of Austrian newspaper Kronen Zeitung to be granted.

“The clauses violate legal prohibitions and morality; they are also not sufficiently transparent,” the judgment concluded.

Explaining why the case was brought forward, the court document says that “there is a risk of repetition because the defendant uses the clauses continuously in business dealings with consumers”.

The illegal clauses were deemed to be non-transparent to consumers, including their liabilities regarding SCA in terms of potential compensation claims.

One clause said that the card company was not obligated to pay compensation if the card does not require SCA during the payment process.

“Typical consumers do not understand the purpose of the clause and only when viewed together with Clause 3 (clause point 6.3. of the General Terms and Conditions) does a connection with liability law become apparent, without this being explained sufficiently clearly,” a report published by the country’s Consumer Council pointed out.

The Supreme Court said that after assessing Clauses 1 and 3, if looked at in the most extreme manner, then the defendant would need to provide evidence that the procedure authenticates with the Mastercard Secure Code/Verified By Visa (MCSC/VBV) protocols.

However, the fulfilment of SCA by this method is a factual claim that burdens consumers with proof that they would not otherwise have to provide.

In this sense, the cardholders would have to provide proof that the MCSC/VBV procedure does not comply with the legal requirements.

The Supreme Court’s ruling also said that some parts of the general terms and conditions impose an “unclear duty of care on cardholders”, considering one clause states that possession of a card has to be convincing at “appropriate intervals”.

“It remains unclear how this obligation can be fulfilled,” the ruling suggested.

The clause in question expands the consumer’s duty of care to their disadvantage, effectively placing a burden on the consumer to possess and protect the card at all times from unauthorised access.

Beyond SCA, the PSP was also admonished in the court case for non-transparent fee charges regarding credit card debt, as well as fees that can be applied if the cardholder continues using the credit card beyond the end of a contract.

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