The District Court of Munich recently refused to make a German man pay his Visa credit card bill, because the charges were made to fund his illegal gambling habit. The lawsuit was filed by Landesbank Berlin AG, which issued the man’s Visa credit account.
According to the German legal advisory site, Anwalt, the unidentified German man played at an unspecified internationally license online casino. Under German law, offshore online casinos are illegal.
Also under German law, the man should have been compelled to pay his credit card charges. Anwalt stated that he admitted to making the charges, but he argued that Landesbank Berlin should never have allowed him to do so.
Since online casino gambling is strictly forbidden in Germany, the man argued that the bank should have blocked his transactions.
Used MCC Code 7995
The German Federal Court of Justice’s case law stated that banks agreed to fulfill the obligations of cardholders to merchants, but they have no special obligations to fulfill the transaction if it is illegal.
The bank cannot plead ignorant, because the transaction used the Merchant Category Code (MCC) 7995, which denotes a gambling-specific charge. The bank also applied special fees for processing “lottery, betting, and casino sales”.
In short, Landesbank Berlin AG (pictured above) knew the charges were gambling-related.
German Banks and the Paradise Papers
German banks have come under scrutiny in recent years due to their facilitation of gambling payments. When the Paradise Papers were released in November 2017, it revealed that several of Germany’s top financial institutions were facilitating payments to international gambling operators.
The release of the documents from the legal firm Appleby, along with corporate services providers Estera and Asiaciti Trust, were particularly embarrassing to a number of big names worldwide: Queen Elizabeth II, Prince Charles, President of Colombia Juan Manuel Santos, U.S Secretary of Commerce Wilbur Ross, and AIG. The Paradise Papers’ release caused criminal investigations in Switzerland and Argentina. The evidence of the global elite’s unsavory financial dealings sparked a new wave of reforms in the European Union, while it caused political uproar in Turkey and Angola.
The Paradise Papers caused audits of financial institutions in India and South Korea. In Germany, the release of the papers by the International Consortium of Investigative Journalists caused scrutiny of Germany’s financial institutions’ payment processing, especially in illicit activities like online gambling.
German Gambler Could Face Fine
While one might be tempted to think the unidentified German gambler got away scot free, that might not be the case if German authorities decide to charge him with “participation in unlawful gambling“. Now that he has admitted to such an act in open court, he exposes him to certain legal backlash.
In 2015, a German man was forced to pay back €63,000 in gambling winnings on a Gibraltar-based site, because he had won the cash through illegal activities. In that case, the man not only lost his winnings, but a Munich court forced him to pay a €2,100 fine as restitution for his misdeeds.
Beyond that, being sued by the bank which issued your Visa credit card sounds like a good way to hurt one’s credit score. The bank is going to report the delinquent payments and might well cancel the card. If the player ran up a huge credit card debt, perhaps he had no other choice.
German Online Gambling Law
Germany’s online gambling laws have been a source of strife and ridicule for most of the past 10 years. The state and federal governments cannot come to an uniform set of policies regarding online gambling.
Online sportsbooks continue to operate, but the European Union believes Germany protects its domestic gaming companies with one-sided statutes. A German court last year upheld its online casino ban, though many see the law upending EU international laws on fair commerce.
Meanwhile, the northern state of Schleswig-Holstein continues to take an entirely different tack than most German states. One would expect Germany to eventually decide on a sensible online gambling law, but under German law, all 16 states have to agree to the same policy for that happen.