frankfurt The most valuable German fintech is threatened with new problems: customers are outraged that their N26 account was abruptly terminated. No transfers, no cash withdrawals: The Handelsblatt is aware of 40 cases of users based in Germany who have not had access to their accounts since last Thursday. There are also numerous complaints from customers in France and Italy on Twitter.
Customers have received the same letter from the online bank, stating that N26 has detected a breach of the terms and conditions of the account in question. “Therefore, we declare the extraordinary termination of your N26 account.”
The notice is given in accordance with the “basic rules for the relationship between the client and the bank”. The termination takes effect immediately.
Niels Nauhauser of the Baden-Württemberg consumer advice center criticizes: “In the termination letter, N26 refers to a violation of the general terms and conditions, but does not provide information about the specific violation of which the customer is accused. customer”.
Termination without notice in accordance with the stated terms and conditions is only possible for good cause. “In the event of a breach of contract, the bank must give its clients a period of time to remedy the situation in accordance with its own terms and conditions,” Nauhauser said.
In fact, in the terms and conditions of the bank there is a 14-page document on “Basic rules for the relationship between client and bank”. In accordance with this, termination “for good cause without observing a period of notice” is only permissible for three reasons: if the client has provided incorrect information about his financial situation, if a significant deterioration of his financial situation, or if the client complies with its obligation to order or reinforce its collateral position within the reasonable term set by the bank.
Among those affected is Alex K.*. He has been a client of N26 for a year and a half. On Thursday morning he bought a sandwich with his bill, he reports. In the afternoon he could no longer access his account.
Proof of origin of the requested funds
Some customers who were still able to log into their account even say that N26 withdrew the entire amount from the account. This is also the case for Lars P.*. On Friday all his money was from N26 been debited from your account. Today you received a message from the bank on your smartphone: your current balance is not enough to cover the outstanding debit.
Of course, P. has to continue paying her running costs, but there is no more money in her account due to the N26 debit. If the transaction is declined, you will be charged a fee, the N26 message said. And if the account later falls into the red, overdraft interest would also be due. It is unclear where exactly the debited money was transferred to.
At the request of the Handelsblatt, N26 said: “Occasionally we have to freeze or close accounts if we detect unusual activity or our terms and conditions are violated. They were unable to comment on the specific reasons behind the closures. However, on the rare occasions that they close accounts, they notify the respective customers directly.Only very few accounts are affected, the smartphone bank said.
In its letter to at least some clients, the neobank also states that it is currently not possible to pay the remaining account balance. “Please send us proof of the source of funds in the form of appropriate documents.” The bank will then “recheck” the payment of the remaining balance.
The wording suggests that the mass redundancies are related to N26’s attempt to install better money laundering controls. Proof of money origin is commonly required in connection with money laundering and fraudulent account activity.
“The same point in time, the backlog of cases, even among some long-term client relationships, indicates that the termination action is not due to a routine review,” Nauhauser says.
Bafin takes N26 with short strap
Over the past two years, N26 has apparently had massive problems with accounts that criminals could use to smuggle their ill-gotten funds abroad. Last summer, the Handelsblatt reported on a list of almost 1,600 Neobank accounts that were opened between May 2019 and July 2021 and were apparently used for fake shops or fraudulent Ebay accounts on the Internet. Apparently N26 struggled for a long time to correctly identify new customers.
German financial regulator Bafin later limited the growth of new clients at N26, with the Italian regulator even halting new clients in March. These restrictions will only be relaxed when the fintech can demonstrate progress in preventing money laundering.
N26 is therefore under pressure to quickly resolve its regulatory issues in order to grow again. In recent months, the company had invested heavily in better security processes and had hired staff for them.
The wording of the customer letter could be an indication that N26 is now looking to its customer base for potentially suspicious accounts to resolve its issues and would rather give too many heads up.
“We advise those affected to ask the bank to explain the specific basis for the termination claim and the alleged breach of duty,” says Nauhauser. If the termination is unjustified, there may even be claims for damages. In this case, those affected should document the damage caused, says Nauhauser.
Plus: Italy’s financial regulator freezes new N26 customers