Consumer Credit: Forfeiture of the Right to Interest for Lack of Proof of Address (CA Paris, 4 June 2026, No. 25/10319)

Paris Court of Appeal, Pôle 4, Chamber 9 – A, 4 June 2026, No. RG 25/10319

What is this judgment about?

The case starts from a very widespread banking product: the revolving credit (crédit renouvelable). In February 2021, a specialist institution (the company FLOA) opened for an individual a credit reserve with a maximum authorised amount of €6,000, repayable at a variable rate depending on the sums actually used. A few days later, the same contract provided for a “special drawdown”: the provision of €500, repayable in 24 monthly instalments of €24.74 at a promotional rate. All of this was accepted by electronic signature on 11 February 2021.

Repayments proceeded normally until summer 2022, then arrears appeared from September 2022. The lender sent a formal notice on 3 June 2023, claiming arrears of €838.48 within eight days, then accelerated the debt (déchéance du terme) on 25 August 2023. In the meantime, the claim changed hands: FLOA assigned it to the company LC ASSET 2 by an assignment schedule dated 31 October 2024. It was therefore that company, as assignee of the claim, which summoned the borrower to pay and claimed €7,744.74.

At first instance, before the protection litigation judge (juge des contentieux de la protection), the bank failed outright: for want of producing a clear and legible statement of account distinguishing the sums used and repaid, it did not demonstrate the existence of a “certain, liquid and due” claim. All of its claims were dismissed. It appealed. And this is where the judgment becomes instructive: the Court of Appeal this time accepts the reality of the credit, but inflicts on the lender a far more structural penalty than the mere dismissal at first instance.

Did the bank prove the existence of the credit?

First step of the reasoning: a lender claiming payment must prove the obligation on which it relies. This is the rule of Article 1353 of the Civil Code (code civil), reinforced by Article 9 of the Code of Civil Procedure (code de procédure civile): each party must prove the facts necessary for the success of its claim. Where the defendant does not appear, as here, the borrower having instructed no lawyer, Article 472 of the Code of Civil Procedure requires the court to uphold the claim only if it considers it “regular, admissible and well founded”. In other words, the opponent’s absence never relieves the bank of the need to prove its claim in full.

Why was the electronic signature upheld?

As the contract was signed electronically, the court checks the reliability of the process. The applicable provisions are Articles 1366 and 1367 of the Civil Code: an electronic document has the same evidentiary force as a paper document, provided that its author can be identified and the integrity of the document is guaranteed. The reliability of the signature process is presumed when the conditions laid down by Decree No. 2017-1416 of 28 September 2017 are met, which itself refers to European Regulation (eIDAS) No. 910/2014.

Here, the lender produced a solid evidentiary file: the complete, paginated contract bundle (18 pages), a proof envelope drawn up by DocuSign’s “Protect and Sign” service as trust service provider, an electronic signature certificate from the company LSTI, an Arkhineo compliance certificate, the transaction timeline and the customer journey. The borrower was identified by his email address, the timestamp was certified, and nothing contradicted the presumption of reliability. The court concludes that the electronic signature is valid and that the contract does indeed exist.

This point deserves to be stressed honestly: on the ground of proving the commitment, the bank did what was required. Many disputes are won precisely because the lender fails to establish the reliability of its electronic signature. That was not the case here. And yet the bank still lost the essentials. The lesson is clear: proving that the contract exists is not enough; the lender must also prove that it has complied with all of its information and verification obligations.

Why did the bank lose its interest?

This is the heart of the judgment. Beyond the existence of the contract, the lender must show that it complied with its pre-contractual obligations, and in particular the assessment of the borrower’s creditworthiness. For a consumer credit, this assessment goes through the “information sheet” (fiche de dialogue) that the borrower completes, and which must be corroborated by objective supporting documents.

Which documents did the lender have to produce?

The court recalls the rule arising from Articles L. 341-2, L. 341-3, L. 312-16 and L. 312-17 of the Consumer Code: where a credit of more than €3,000 is taken out at a distance (as is the case with an electronic contract), the information sheet must be corroborated by supporting documents that are up to date when the information form is drawn up. These documents, the list of which is set by decree, number three:

The lender produced a great deal: the borrower’s driving licence (identity), a January 2021 payslip (income), a bank account statement of details (RIB) in his name, and the record of consultation of the national file of credit repayment incidents for individuals (FICP) before the funds were released. Yet one document is missing, and only one: no proof of address was put before the court, despite the express request the pre-trial judge had sent to it on 15 July 2025.

The consequence is implacable: “Accordingly, forfeiture of the right to contractual interest must be ordered on this ground.” One document missing out of three, and all the interest collapses. The strictness may seem harsh, but it is consistent with the protective logic of consumer law: the creditworthiness check is not a formality, it is the bulwark against over-indebtedness. An incomplete file means a check presumed to be deficient.

Can the court raise the point on its own?

Here is the most remarkable aspect of the case. The borrower never came forward: no lawyer instructed, no pleadings, no challenge. In a purely adversarial system, he would have lost by default. But in consumer law, the court has a power, and even a duty, to raise points of its own motion (relevé d’office). Here, it was the pre-trial judge who, by a notice of 15 July 2025, “raised of his own motion” the question of forfeiture of the right to interest and called on the bank to produce its entire file: full account history, formal notice, loan offer, standardised European pre-contractual information sheet (FIPEN) and proof of its delivery, information sheet, record of consultation of the FICP, insurance notice, and all evidence on the reliability of the electronic signature.

This mechanism is a vital protection for consumers. It means that a borrower who is overwhelmed, isolated, or unaware of his rights is not thereby condemned to pay everything the bank claims. The court checks the regularity of the lender’s file, and a clear breach is penalised even in the absence of any challenge. The bank, a professional creditor well versed in this type of litigation, must therefore present a complete file from the outset: it cannot count on the borrower’s silence to mask the gaps in its own handling of the credit.

How is the debt recalculated?

Once forfeiture of the right to interest has been ordered, Article L. 341-8 of the Consumer Code sets out the consequences: the borrower is liable only for repayment of the principal, in accordance with the agreed repayment schedule. The sums already received by the lender as interest are returned to the borrower, or applied to the outstanding principal, and themselves bear interest at the statutory rate from the date of payment.

In concrete terms, the court goes back over the accounts. The sub-account corresponding to the €500 special drawdown has been repaid in full: nothing remains on that score. For the main account, the total drawdowns (that is, the capital actually borrowed) amount to €7,096.52. All the sums paid by the borrower, namely €2,838.15, must be deducted from this. The balance due is therefore only €4,258.37.

Why is the penalty clause set aside?

Credit agreements almost always contain a penalty clause (clause pénale): a fixed indemnity (often 8% of the outstanding principal) that the borrower must pay on default, in addition to the principal and interest. The court sweeps it aside in a single stroke: “The statutory limit on the lender’s claim precludes it from claiming payment of any other sum and in particular of the penalty clause provided for by the article now numbered L. 312-39 of the Consumer Code.” In other words, when the lender is forfeited of its right to interest, it can recover only the principal, not a euro more. The default indemnity disappears along with the interest.

Why is the 5-point surcharge removed?

One last question remains, more technical but financially significant. Even when forfeited of its right to contractual interest, the lender may in principle claim interest at the statutory rate on the outstanding principal (Article 1231-6 of the Civil Code), and that rate is automatically increased by 5 points two months after the decision becomes enforceable (Article L. 313-3 of the Monetary and Financial Code).

But the court sets this surcharge aside. It applies the case law of the Court of Justice of the European Union (CJEU, 27 March 2014, Case C-565/12, Le Crédit Lyonnais): the penalty of forfeiture must retain a genuinely dissuasive effect. Yet if the surcharge resulted in the lender receiving amounts equivalent or close to those it would have obtained without the forfeiture, when most of the credit had been granted at a rate of 9.49%, the penalty would lose all meaning. In the operative part, the court therefore expressly disapplies Article L. 313-3 of the Monetary and Financial Code. The outstanding principal will bear interest only at the statutory rate, from the formal notice of 25 August 2023.

What should you take away if a bank is pursuing you?

This judgment is good news for borrowers, and in several respects. First, it recalls that the burden of proof lies entirely on the lender: it is for the lender to reconstruct a complete file, and the slightest missing document (here a mere proof of address) can cost it all of its interest. Second, it confirms the power of the court’s ability to raise points of its own motion: even an absent, unrepresented borrower benefits from the court’s scrutiny of the regularity of the credit. Finally, it illustrates the cascading effect of forfeiture: contractual interest, penalty clause and late-payment surcharge fall together, reducing the debt to the principal alone, net of repayments already made.

That said, one must remain clear-sighted about the scope of the decision. The bank is not ordered to compensate the borrower: it still obtains repayment of the principal, and the contract is not annulled. Forfeiture of the right to interest is a powerful penalty, but it does not turn a credit into a gift. Above all, the lesson applies first to borrowers who actively defend themselves: if the court’s own-motion review operated here, it is because the case was examined on appeal with a demanding pre-trial procedure. In practice, a well-advised borrower who himself raises the lender’s failings, with supporting evidence (FIPEN not delivered, deficient creditworthiness check, missing supporting documents, incorrect rate, failure to consult the FICP), puts every chance on his side rather than relying on the court’s initiative alone.

One last point for situations where a credit was taken out following a fraud (fake adviser, identity theft, manipulation): forfeiture of the right to interest is one avenue; but when it comes to establishing the bank’s liability for lack of vigilance over payment transactions, the strongest lever is not the anti-money-laundering regulation, whose purpose is exclusively the protection of public order, but the technical security obligations arising from the payments framework (EBA technical standards supplementing PSD2: strong authentication, transaction monitoring, detection of abnormal patterns). This avenue, still under-exploited, deserves to be examined systematically. Each case calls for a tailored analysis.

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