Don’t be fooled: some financial institutions charge fees that are illegal | Business

The majority of inconsistencies were found in the contractual provisions related to the liability of institutions for unauthorized payment transactions, the Bank of Lithuania reported on Monday.

“Payment service providers must ensure that contracts comply with applicable legal requirements. They need to be constantly reviewed and updated. In addition, contracts must be clear and comprehensible to the user,” Vaidas Cibas, director of the Financial Services and Markets Supervision Department of the Bank of Lithuania, said in a statement.

According to the central bank, a quarter of the assessed contracts specify shorter deadlines than the law, by which time the payer must report an unauthorized, improperly initiated or completed payment transaction. Also, a quarter of institutions unjustifiably partially transfer responsibility for unauthorized or improperly authorized payment transactions to consumers.

More than half of the contracts evaluated by LB contain only a general provision regarding the institution’s responsibility for the fulfillment of obligations or the compensation of direct losses, without distinguishing that the institution is responsible for the proper initiation or execution of payment transactions.

According to LB, the evaluated contracts also often do not specify in detail or do not indicate at all the conditions for returning the amounts of payment transactions initiated by the recipient or through the recipient to the payer.

It is claimed that some of the institutions specify terms for contract amendment and termination that do not comply with the law, and provide for the possibility of increasing the commission fee without complying with the contract amendment procedure. In cases of termination of the contract at the initiative of the user, account closing fees or additional conditions are foreseen, which should not be present.

Also, in the evaluated contracts, the institutions provide the right to block the payment instrument, but in most cases they do not undertake the obligation to inform the user regarding the blocking of the payment instrument and its reasons before the payment instrument is blocked or immediately following it is blocked.

LB noticed that contracts of institutions are often long enough, user-unfriendly language is used, and some of the contracts do not have numbering or are too confusing. When concluding contracts with consumers in English, institutions often use concepts that are not characteristic of Lithuanian law, which make it difficult for consumers to understand the terms of the contract.

According to V. Cibo, LB appealed to institutions whose general provisions of payment service contracts do not comply with the law, so that they immediately eliminate the discrepancies.