Fraud involving online loans issued without a citizen’s knowledge is not, by itself, sufficient grounds for declaring a loan agreement invalid.
The Operative Information Center-OMM was informed of this by the Supreme Court of Azerbaijan.
The court said the digitalization of banking services in recent years has led to the widespread issuance of online loans. While the service enables citizens to obtain loans quickly without visiting a bank, it has also created new legal risks.
Azerbaijani legislation allows banks to open accounts remotely and conclude loan agreements online. Under rules approved by the Central Bank, banks may use enhanced electronic signatures, video calls, video recording, facial recognition, one-time passwords (OTPs) and other identification tools when providing online services.
Disputes recently brought before the courts show that, in some cases, third parties obtain citizens’ personal data, take out online loans in their names and transfer the funds to their own accounts.
Practice also shows that some citizens share one-time passwords (OTPs) sent to their mobile phones, access details for banking applications or facial-recognition information with other people. This can enable fraud against them.
Many people believe that, as victims of fraud, they bear no legal responsibility for the loan debt. Legally, however, the matter is more complex. Citizens are also responsible for protecting their personal data. For example, individuals must not provide their FIN codes, identity cards or copies of them, SMS verification codes, banking application login details or biometric data, including facial-recognition and fingerprint data, to others, and must ensure their security.
Citizens are advised not to give their FIN codes or identity cards, or copies thereof, to unknown individuals; to protect their biometric data; never to share SMS verification codes; to regularly monitor banking notifications received on their phones; to immediately inform their bank when changing their mobile number; not to trust suspicious calls or messages; and to check their bank accounts regularly.
Court practice shows that the mere existence of fraud is not sufficient to declare a loan agreement invalid. In each individual case, the court assesses the bank’s conduct, whether it complied with the law, the citizen’s own actions and all evidence submitted, taken together.
