Illegal online gambling: banks cannot justify themselves

Payment service providers are prohibited from participating in transactions related to illegal online gambling. But now the Leverkusen District Court has also made it clear that banks cannot invoke the use of an automated process to carry out such transactions as justification.

In its ruling of 21 February 2018 – Ref.: 158 C 19107/17 – the AG Munich confirmed approximately one year ago that banks violated the prohibition of participation in credit card payments in connection with illegal online gaming pursuant to Section 4 (1) sentence 2 2nd half sentence GlüStV 2012. As a result, they lose their payment claims against their customers.

No claim for reimbursement of expenses for banks

In the case of credit card payments, the bank first pays in advance and transfers the transaction amount to the payment recipient – in this case to the online gaming provider. Depending on the type of contract, the bank collects the amount either immediately or at an agreed later date from the customer’s deposited current account. This is referred to as the bank’s claim for reimbursement of expenses.

However, the AG Munich decided that the bank would not be entitled to any reimbursement of expenses if it infringed a legal prohibition in a transaction – as in the case of payments in connection with illegal online gambling.

In a lawsuit conducted by the law firm Lenné, the AG Leverkusen confirmed the opinion of the AG Munich on February 19, 2019, but emphasized a further legal aspect in its decision. In the case of an existing statutory ban, it is up to the banks to take appropriate precautions to ensure that they do not violate the ban. AG Leverkusen held this view as follows:

“Due to the law applicable in Germany to the organization of gambling, it was incumbent upon the plaintiff to take precautions not to violate this and not to cooperate in payments prohibited in connection with illegal gambling. To that end, it must draw up contracts with its contracting undertakings accordingly, i.e. exclude payment obligations for games of chance organised in Germany without authorisation, and ensure that this is the case in fact.” (AG Leverkusen, judgment of 19.02.2019 – Ref.: 26 C 346/18, emphasis by the law firm)

Automated procedures: no justification

The view of AG Leverkusen that banks cannot justify themselves by referring to the use of an automated procedure is particularly noteworthy. A fully automated mass transaction does not release banks from their obligation to comply with applicable law:

“It cannot successfully object to this, saying that the payment procedure is fully automated. In the case of an automated procedure, payments to gambling providers initiated automatically in Germany by credit card can also be blocked without permission. Moreover, the use of an automated procedure does not release the user from the obligation to comply with applicable law. Rather, this must also be complied with in such procedures or otherwise not to be used.” (AG Leverkusen, judgment of 19.02.2019 – Ref.: 26 C 346/18, emphasis by the law firm)

Like the AG München, the AG Leverkusen was also of the opinion that transactions in connection with illegal online gaming could be easily identified as such by the bank using the Merchant Category Code (MCC) and the “White List” of the gaming supervisory authorities of the federal states.

In this regard, the AG Leverkusen:

“For the plaintiff, it was also obvious and liquid evidence that the defendant had claimed for a legally prohibited event fee from its contractual partners and that it was legally forbidden for the plaintiff to participate in payment transactions. This already results from the fact that the defendant used the card in Germany and the payments to its customers were marked with the Merchant Category Code (MCC) 7995, which stands for bets (including lottery tickets, casino gaming chips), i.e. gambling. The fact that its contractual partners, whose business it thus knew, are not allowed to organise games of chance in Germany could be established by inquiry to the competent authorities or from the “White List of the gambling authorities of the countries: Gambling provider with a permit in Germany ” published on the Internet by the Joint Office for Gambling of the Federal States since the end of 2015 and continuously updated. (AG Leverkusen, judgment of 19.02.2019 – Ref.: 26 C 346/18)

The judgment of the AG Leverkusen is to be regarded as groundbreaking, even if it remains to be seen how the case law will develop. After all, there is still no supreme court jurisdiction on the subject.

The law firm Lenné will gladly fight for you to recover your payments to illegal gambling providers by taking civil action against the credit card banks. For an initial assessment, the law firm is at your disposal free of charge. Simply make an appointment for an initial, non-binding consultation.