§ 3-7. Burden of proof when the customer disputes a payment

This section applies to disputes about payments. If a customer denies having authorised an executed payment, or believes it was executed incorrectly, the burden of proof (the duty to provide evidence) lies with the payment service provider. The bank or other payment company must be able to show that the payment was authenticated (the identity behind it was verified), that it was correctly recorded and entered in the accounts, and that a technical breakdown or other errors in the service did not affect it.

If the payment was initiated through a payment initiation service provider, responsibility is divided. In that case it is the payment initiation service provider that must prove that the payment was authenticated and correctly recorded, and that a breakdown or errors in its own service played no part. This applies within the payment initiation service provider's own area of responsibility.

The third paragraph concerns how much the use of the payment instrument (for example a card) proves. If the payment service provider has recorded use of the instrument, that alone is not enough to show that the payer authorised the payment. Nor is it enough to show that the payer acted fraudulently, intentionally or with gross negligence by breaching their obligations. The obligations referred to are in § 4-23 first paragraph and § 4-24 first paragraph. Anyone who wants to claim such breaches must present documentation. This applies both to the bank and to any payment initiation service provider.

The fourth paragraph tightens the standard of proof when the customer is a consumer. The standard of proof is qualified preponderance of probability to establish that the consumer authorised the payment, or that the consumer deliberately breached their obligations. Ordinary preponderance of probability is therefore not enough.

The rule is a special rule in relation to § 3-5, where the starting point is that the burden of proof lies with the party best able to secure evidence. A corresponding rule for entering into agreements electronically is in § 3-6. Under § 4-23, the customer must use the account and the instrument in accordance with the terms and take reasonable precautions to protect personal security information. Under § 4-24, the customer must also give notice without undue delay in the event of loss, theft or unauthorised use. A customer who wants a payment corrected must give notice no later than 13 months after the debit, but the deadline does not apply if the bank has not given the customer the information about the payment that the law requires.

Example: A customer says that a payment was not authorised. The bank only points to the fact that the payment instrument was used. That is not enough.