Introduction
Payment fraud is a growing scourge, particularly with the rise of digital technologies. Fraudsters are increasingly inventive in circumventing the security systems of banks and payment service providers (PSPs). Faced with this threat, financial institutions and legislators are constantly seeking solutions to protect consumers and businesses. Among these solutions, the recall procedure, or return of funds, stands out as a mechanism to consider in establishing the liability of PSPs.
What is the Recall Procedure?
The recall procedure allows a wire transfer to be reversed in the event of error or fraud. It involves the ordering party (the client who is the victim of the fraud) requesting their PSP (their bank) to recall the funds from the beneficiary’s PSP (the bank to which the funds were transferred). Although this procedure is not mandatory and remains little known to the general public, it is beginning to generate litigation, particularly due to its complex implementation and the potential obstacles to fund recovery.
How to initiate a “recall” procedure with your bank in the event of payment fraud?
When you report the fraud to your bank, simply request in writing that your bank initiate a recall procedure with the beneficiary’s bank. No particular formalities are required. For reasons of speed and evidence, favor email or the messaging system in your secure online banking area. Provide the required supporting documents as quickly as possible and stay informed of the progress of the procedure.
Legal Framework of the Recall Procedure
1. The French Monetary and Financial Code
The French Monetary and Financial Code does not specifically govern the recall procedure. However, it contains provisions that may apply indirectly to this procedure. For example, Article L. 133-21 of the French Monetary and Financial Code provides that the payer’s PSP must endeavor to recover the funds involved in a payment transaction in the event of error or fraud. However, this provision does not trigger an automatic return of funds, and several factors may prevent such a return, such as the absence of sufficient funds in the beneficiary’s account.
2. The SEPA Credit Transfer Scheme Rulebook
The SEPA Credit Transfer Scheme Rulebook, adopted by the European Payments Council, also governs the recall procedure.
It provides for a procedure for processing a request for return of funds according to the following provisions:
“ Article CT 02.01: before initiating a recall, the originator’s bank must verify whether the SEPA credit transfer was incorrectly executed for one of the following reasons: Duplicate, Technical issue, or Fraud
Article CT 02.03: the beneficiary’s bank must process the recall immediately upon receipt of the request and transmit a positive or negative response within 15 days;
If the SEPA credit transfer has already been credited to the beneficiary’s account, the beneficiary’s bank may, depending on the legislation of the country and/or the account agreement concluded with the beneficiary:
— immediately generate a positive response by debiting the beneficiary’s account,
— decide, if necessary, to request the beneficiary’s authorization to debit the account
— be obligated to obtain the beneficiary’s authorization to debit the account.”
Thus, according to this document, the originator’s bank must verify whether the SEPA credit transfer was incorrectly executed for one of the following reasons: duplicate, technical issue, or fraud.
The beneficiary’s bank must process the recall immediately upon receipt of the request and transmit a positive or negative response within fifteen days. However, the success of the recall procedure is not guaranteed and depends on the legislation of the country and the account agreements entered into between the beneficiary’s PSP and the beneficiary.
Case Law and Practical Issues
The principle of irrevocability of payment orders constitutes a rather convenient pretext for banks to escape any liability resulting from an incorrectly executed transaction, even though the reform introducing the “Verification of Payee” (VoP) system has brought about a development that helps limit fraud risks.
However, the bank’s liability in implementing the recall procedure can still be engaged, even if, until now, case law seems very reluctant on the subject of compensation for damages suffered in the event of bank negligence.
Case law relating to the recall procedure remains relatively rare. Nevertheless, two recent rulings clarify certain essential aspects of this mechanism, particularly regarding the liability of payment service providers and the duty of diligence in implementing the procedure. These decisions illustrate the conditions under which the return of funds may be requested and the practical issues that arise. These rulings will be analyzed below to identify their key takeaways.
1. Irrevocability of Payment Orders
The regime governing bank wire transfers was profoundly modified by European Regulation no. 2024/886 of 13 March 2024, introducing an obligation of active verification of the beneficiary, where the previous system left considerable discretion to Payment Service Providers (PSPs).
Before this reform, and until 9 October 2025, the law provided extensive protection to PSPs in the event of transfer errors, as they were not legally required to verify the consistency between the beneficiary’s name provided and the IBAN number of the destination account. This lack of systematic identity verification of the beneficiary long constituted a vulnerability exploited by fraudsters, particularly through fraudulent IBAN substitution. In accordance with Article L. 133-21 of the French Monetary and Financial Code, if the identifier provided by the user was incorrect, the PSP was not liable for the improper execution or non-execution of the payment transaction, thereby allowing both the payer’s PSP and the beneficiary’s PSP to escape any liability.
The new “Verification of Payee” (VoP) system now imposes active vigilance on financial institutions. Article 5 quater of Regulation 2024/886 requires PSPs to offer this verification service, which is considered a major step for wire transfer security. When the payer enters the IBAN and the beneficiary’s name, the payer’s PSP must request the beneficiary’s PSP to verify the consistency between the name provided and the IBAN of the destination account. This verification must be carried out immediately, before the payer can authorize the transfer, and must identify cases of partial match, no match, or if the account cannot be identified. Compliance with this obligation is essential, as a PSP that has not met the VoP requirements will not be able to benefit from the liability exemption provided by the French Monetary and Financial Code and will have to promptly refund the transferred amount to the user in the event of a breach. Nevertheless, the user retains their freedom of action: even in the event of a mismatch, they may confirm their payment order, thereby fully assuming the risk associated with the transaction and releasing the PSP that has fulfilled its verification duty from liability.
2. CA Agen, civ. ch., 5 July 2023, no. 22/00694
However, PSPs may have their liability engaged in the event of a breach of their obligations in the context of the recall procedure. For example, the Court of Appeal of Agen held the beneficiary’s bank liable for failing to promptly transmit the information necessary for the recovery of funds, thereby causing loss of chance damages to the company that was the victim of fraud (CA Agen, civ. ch., 5 July 2023, no. 22/00694).
In this case, the reimbursement request was made on 17 May 2018 by the originating bank, but the beneficiary’s bank waited until 29 May 2018 to request a copy of the police report from the originating bank and only responded to the payer’s bank’s request on 30 May 2018, indicating that the funds credited to the beneficiary’s account were no longer available at that date for a refund.
The Court ruled that “while the beneficiary’s bank has a 15-day period to provide a positive or negative response to the request for return of funds, it must immediately process the request made by the payer’s bank.” Consequently, the response time of the beneficiary’s bank, which had not immediately reacted but had waited 13 days to respond, constitutes “a breach of the duty of diligence incumbent upon it.”
The decision emphasizes that the burden of proof lies with the relevant payment service provider. The judges added that “the fact of invoking banking secrecy in its written submissions, which cannot be raised given the requirements set out in the aforementioned text, demonstrates the existence of unjustified delay.”
The judges also noted that “no legal or regulatory provision requires the request sent to the beneficiary’s bank to be accompanied by a copy of the police report, even if the return of funds procedure was initiated due to fraud. The absence of such a requirement is all the more justified given that, within the SEPA Recall mechanism, the admissibility of the payer’s request for return of funds to their bank is first verified by the latter, which must then decide, under its own responsibility, whether to follow up by transmitting it to the beneficiary’s bank.”
The Court held that “even though the [originating bank] was not legally required to block the funds, its wrongful inaction appears to be directly and certainly causally related to the deprivation for the [victim company] of the possibility of obtaining the return of funds available on the date of the [originating bank’s] request (17 May 2018), which constitutes loss of chance damages.”
To assess the material damages of the company that was the victim of fraud, the Court considered that it was appropriate to take into account not only the beneficiary’s bank’s response time in the face of fraud and its lack of information for recovering the funds, but also the negligence of the victim company, which had not verified the transaction with a stranger and had chosen an unsecured payment method. Consequently, the damages are estimated at 50% of the transfer amount, i.e., 2,000 euros (4,000 euros x 0.5).
3. CA Versailles, 9 Sept. 2025, no. 24/05458
The payer’s PSP must not delay, without objective reason, the implementation of the recall procedure once the client informs them of the fraud they have been a victim of. Indeed, the Court of Appeal of Versailles, in a ruling of 9 September 2025 (no. 24/05458), expressly held that the maximum ten-day period provided for by the SEPA Rulebook does not authorize inaction, and that the bank’s diligence is likely to determine the success of the return request.
3.1 Summary of the facts
The case concerns a dispute between Mr. [U] and S.A. Boursorama, following an investment fraud suffered by Mr. [U]. He had been solicited by phone on 22 June 2021, then on 1 September 2021, for a capital-guaranteed investment promising a return between 6% and 11%. After expressing interest, a second individual proposed that he invest 138,900 euros in a “Tesla fund” for six months, with an announced return of 6.38% net of tax.
On 4 November 2021, Mr. [U] placed the disputed wire transfer order from his Boursorama current account to a bank account held at a Spanish bank. The wire transfer in question was executed on 9 November 2021 after several verifications by the bank.
On 13 November 2021, Mr. [U] informed Boursorama of the fraud and asked how its services could help him contest the transaction and recall the funds. On 15 November 2021, he sent the bank the response from the Spanish institution that had received the funds, which invited him to request the recall in accordance with the applicable Credit Transfer Rulebook. However, it was only on 17 November 2021 that the bank allegedly indicated it had taken this step. The bank thus only made the return request four days after its client’s message informing it of the fraud and requesting the return.
The individual claimed that this inaction on the part of the bank was negligent and had deprived him of a chance to recover the transferred sum.
3.2 The bank penalized for delaying the implementation of the recall procedure
The Court of Appeal of Versailles then held that by not making the return request until four days after being expressly informed of the fraud by its client (from 13 to 17 November), the bank had delayed, without objective reason, the implementation of the procedure provided for in the SCT Rulebook.
Directly citing the diligence requirements, the Court emphasized that, “contrary to what it argues, the ten-day period provided for in the Rulebook is not a period within which the payment service provider is free to choose when to make the return request, as its diligence is likely to determine the success of the request.” In other words, the 10-day period is the absolute deadline not to be exceeded, but it does not give the PSP the right to choose its moment to act.
This delay was characterized as a fault, having caused Mr. [U] damages consisting of the loss of a chance to recover the transferred sum. The Court then reiterated the rule inherent to the recall according to which “the return of funds requires that the beneficiary’s account still be funded on the date of the request and that the beneficiary expressly accepts it.” Consequently, a request for return of funds made eight days after the disputed payment transaction was illusory.
However, Boursorama was only ordered to pay Mr. [U] a symbolic sum of one euro in damages.
Thus, even when the bank’s fault is proven, only half the battle is won in obtaining satisfactory compensation. The most difficult demonstration for the litigant remains that of causation: they must succeed in proving that, had the bank not committed a fault, they would then have had a reasonable chance of recovering the funds.
What is the future of the recall procedure in the event of banking fraud?
Bill aimed at protecting individuals against wire transfer fraud by facilitating the return of funds procedure, no. 1872
This ruling of the Court of Appeal of Versailles perfectly highlights the major shortcoming of the current system: while the SEPA Credit Transfer Rulebook sets best practices for the recall procedure, this mechanism has no binding force and relies solely on the consent of the beneficiary or the bank.
However, 2025 marks a legislative turning point aimed at correcting this structural weakness and strengthening the security of banking transactions. The bill of 30 September 2025 is intended to fill the gap left by the French Monetary and Financial Code.
The proposed framework would be structured in three stages:
- The payment service user could request the initiation of the return procedure within a maximum period of forty-eight hours following the execution of the wire transfer
- The ordering party’s PSP would be required to transmit the return request without delay to the beneficiary’s PSP, which would then be required to provisionally freeze the funds
- In the event of established fraud or manifest error, the wire transfer amount would be returned to the ordering party
CONCLUSION
The recall procedure represents an additional legal tool to consider for establishing the liability of PSPs in the context of payment fraud cases. However, its implementation remains complex and uncertain, due to legal and practical obstacles. Future court decisions will certainly provide useful clarifications and may nuance this perspective.
The bill of 30 September 2025 thus aims to fill the current gaps in the French Monetary and Financial Code by more clearly regulating the recall procedure and the liability of PSPs in the event of fraud. It will soon be examined by the Finance, General Economy, and Budgetary Control Committee.
