Key GDPR Fines in Mid-2025: Luka (Replika), TikTok, and ING Bank Śląski

This post discusses three recent decisions of Data Protection Authorities imposing fines for GDPR infringements on Luka Inc., TikTok, and ING Bank Śląski. While most of our analyses usually focus on judgments of the Court of Justice of the European Union, in this case we turn to decisions of national authorities. Such decisions tend to attract significant attention, either because of the seriousness of the violations or the high amounts of the penalties, which makes them a frequent subject of debate. The three cases selected meet these criteria and, moreover, were issued within the past few months. They are also directly relevant to consumers, as they highlight risks that many of us face in everyday life when using apps or online services where personal data may be mishandled.

 

 

Luka Inc. 

On 10 April 2025, the Italian Data Protection Authority (Garante per la protezione dei dati personali) issued a decision against Luka Inc., the U.S. company behind the Replika chatbot. Replika is marketed as an AI “companion” designed to boost users’ mood and wellbeing, and can be set up as a friend, mentor, therapist or even a romantic partner. But according to the Garante, the way Luka handled users’ personal data fell far short of what the GDPR requires.

The investigation showed that Replika’s privacy policy did not clearly identify the legal ground for the many different ways in which users’ data were processed – for example, data used for running the chatbot versus data used for developing the large language model behind it. Instead of specifying purposes and corresponding legal bases, the policy only gave vague, generic statements like: “We care about the protection and confidentiality of your data. We therefore only process your data to the extent that: It is necessary to provide the Replika services you are requesting, you have given your consent to the processing, or we are otherwise authorized to do so under the data protection laws” (btw – doesn’t that sound familiar from many privacy policies?). This lack of granularity made it impossible for users to understand how their data were really being used, in breach of Articles 5(1)(a) and 6 GDPR.

What’s more, the privacy notice was only available in English, even though the service was offered in Italy. It also failed to explain key points required under GDPR: what kinds of data were collected, how long they were stored, whether data were transferred outside the EU, and for what purpose. Some statements were even misleading, for instance, suggesting that personal data might be transferred to the U.S., while the company later claimed no such transfers took place. Such gaps and contradictions meant that users could not make informed choices about their data.

However, the most troubling finding was that the Garante concluded Luka had failed to implement effective safeguards for children. Although the service was formally intended for adults, it lacked genuine age-verification mechanisms. Registration required only a name, email address, and gender, which allowed minors to create accounts. Even when users declared they were under 18, no technical barrier prevented them from accessing the platform. In practice, this meant that children could be exposed to age-inappropriate content, including sexually explicit material. Moreover, even after updates to the privacy policy, technical testing showed that under-18 users could still bypass the age restriction simply by editing their profile. 

 

For these violations, the Garante imposed an administrative fine of EUR 5,000,000, representing half of the maximum amount available under Article 83(5) GDPR.

 

 

TikTok Technology Limited

 

Another significant decision was issued by the Irish Data Protection Commission (DPC) in May 2025 against TikTok Technology Limited. Although the full text of the decision has not yet been published, the official press release provides insight into the reasons for the sanction.

 

The inquiry examined both the lawfulness of TikTok’s transfers of European users’ personal data to China and the adequacy of the company’s transparency regarding those transfers. The DPC concluded that TikTok had infringed the GDPR in two key respects.

 

First, the Commission found that TikTok’s transfers of user data to China violated Article 46(1) GDPR. The company failed to verify, guarantee, and demonstrate that personal data of European users – remotely accessed by staff in China – was afforded a level of protection essentially equivalent to that required within the EU. TikTok’s own assessments of Chinese law highlighted serious divergences from EU standards, particularly risks under the Anti-Terrorism Law, the Counter-Espionage Law, and the National Intelligence Law. Nevertheless, the company did not adequately address these risks or ensure that its contractual safeguards were effective.

 

Second, the DPC held that TikTok had not complied with the information duties set out in Article 13(1)(f) GDPR. Earlier versions of its privacy policy (in force between July 2020 and December 2022) failed to identify the countries involved in data transfers and did not explain the nature of the processing – for instance, that personnel in China could remotely access data stored in Singapore and the United States. This lack of clarity prevented users from understanding who could access their data and under what conditions.

 

The decision imposed not only administrative fines but also corrective measures. TikTok was given six months to bring its practices into compliance, failing which data transfers to China would have to be suspended altogether. The total fine amounted to EUR 530,000,000, comprising EUR 485,000,000 for the unlawful transfers and EUR 45,000,000 for the lack of transparency.

 

 

ING Bank Śląski

 

The third discussed decision was delivered on 23 July 2025 by the Polish Data Protection Authority (UODO) against ING Bank Śląski S.A., which was fined PLN 18,416,400 (around EUR 4,000,000). The case revolved around the bank’s widespread practice of copying and scanning ID cards of both existing and potential clients, even in situations where such a step was not required by law. The bank introduced this practice after the amendment of Polish anti-money laundering provisions, interpreting them as justifying the systematic copying of IDs.

 

The investigation revealed that between April 2019 and September 2020 the bank systematically scanned ID documents not only during customer onboarding, but also in contexts where no anti-money laundering (AML) obligations applied – for example, when a customer filed a complaint about an ATM. In practice, the bank’s internal procedures made the delivery of services conditional on handing over a scanned ID, leaving consumers with no real choice.

 

As emphasized in the decision, both AML law and the GDPR require banks to conduct a risk-based assessment and determine, case by case, whether copying an ID is genuinely necessary. ING failed to perform such assessments. Instead, it adopted blanket rules requiring ID copies in numerous situations, regardless of whether AML obligations applied. As a result, the bank processed extensive amounts of sensitive identifying information without a valid legal basis under Article 6 GDPR. Although no specific harm was demonstrated, the decision underscores that ID cards contain a wide range of personal data – including full name, date of birth, parents’ names, unique national ID number (PESEL), photograph, and document series. Taken together, these data significantly increase the risk of identity theft or fraudulent loans. Given that ING had millions of individual and corporate clients during the period in question, the potential consequences of such unnecessary data collection were substantial.

Produce Labels and the Circular Economy: CJEU interprets "Packaging" in Interfel (C-772/24)

On August 1, the CJEU delivered an interesting judgment in Interfel (C-772/24), which could assist in promoting sustainable consumption. 

Photo by amoon ra on Unsplash

In an effort to combat waste and support circular economy, French law prohibited the placing of labels directly on fruit or vegetables sold on French territory, unless the labels were home-compostable and made of bio-sourced materials (para 8). The idea was straightforward: consumers could more easily and sustainably dispose of spoiled fruit or vegetables. (Who has not spent hours of their life removing annoyingly sticky, unwilling-to-just-let-go labels from produce?) 

However, the question arose whether this national rule complied with Directive 94/62 on packaging and packaging waste. Article 18 of the Directive requires the Member States to permit the sale of products on their territory if their packaging complies with the Directive. This provision prevents Member States from imposing additional restrictions that could hinder the internal market.

The CJEU began by emphasising the Directive's environmental objectives: to reduce the impact of packaging and packaging waste on the environment, covering all packaging placed on the market (para 12). To assess whether the French measures complied with EU law, the Court examined the Directive's definition of "packaging". The term must be interpreted broadly (para 13), but still fulfil one of the functions set out in the Directive, namely: "containment, protection, handling, delivery and presentation of goods" (para 15). Packaging must also fall into one of the three categories: "sales packaging, grouped packaging or transport packaging" (para 17). Ancillary elements integrated into packaging are also considered packaging (para 20). Annex I to the Directive provides illustrative examples of packaging, including "labels hung directly on or attached to a product" (para 21).

In answering the national court's question, the CJEU stressed that, to qualify as packaging, a product must meet the above criteria (para 25). Specifically, it must perform at least one of the three main packaging functions: containment/protection, handling/delivery, or presentation. Labels on fruit and vegetables are typically smaller than the produce itself and therefore unlikely to provide containment or protection (para 28). Nor are they generally used for handling or delivery purposes (para 29). The remaining question was whether labels serve a presentation function - a matter the Court noted could depend on the specific context/ label (para 30).

In conclusion, the CJEU indicated that France may impose additional sustainable requirements for such labels, but only where the labels do not perform any of the three functions assigned to packaging under EU law.

The Digital Services Act in action: combatting illegal and unsafe products

With the development of online marketplaces, combating illegal and unsafe products reaching EU consumers is not easy. In recent years, online platforms such as Temu, which offer heavily discounted goods that often directly ship from China, have become popular with consumers.

Temu first came under the 'spotlight' when BEUC- The European Consumer Organisation and national consumer protection organisations initiated an enforcement campaign against Temu (see our report here).

Then, in May 2024, the EU Commission designated Temu as a Very Large Online Platform under the Digital Services Act (DSA), which conferred obligations on Temu to assess and mitigate any systemic risks stemming from its services. 

Following this, in October 2024, the Commission opened formal proceedings to assess whether Temu may have breached the DSA in areas linked to the sale of illegal products, the potentially addictive design of the service, the systems used to recommend purchases to users, as well as data access for researchers. In July 2025, the Commission published preliminary findings that Temu was indeed in breach of the obligation under the DSA to properly assess the risks of illegal products being disseminated on its marketplace, and continues investigation in the other identified areas of concern.

Testing by consumer organisations has revealed that many parcels from Temu and similar online platforms contain products that are not compliant with EU consumer law and are even potentially harmful to consumers. These include, for example, clothing that contains banned chemicals, phone chargers that can explode, and balloons for children that contain illegal chemicals.

In an interesting and informative interview for Deutsche Welle, Augustin Reyna, Director General of BEUC, explains these developments (see here). 

Polish bankruptcy law fails consumers with unfair loan terms - CJEU in Wiszkier (C-582/23)

Photo by Towfiqu barbhuiya on Unsplash

In July 2025, the CJEU issued a judgment in Wiszkier (C-582/23), concerning a Polish case involving a consumer mortgage loan indexed to Swiss francs. In this instance, the consumer had to declare bankruptcy after being unable to meet, among other obligations, their mortgage payments. Although the bankruptcy court found that the contract potentially contained unfair terms, raising the possibility of the contract being null and void, Polish law prohibits this court from examining this issue further. Under Polish law, even if the unfairness of contract terms had not been previously raised by the consumer, the bankruptcy court is only competent to approve or reject a repayment plan based on a list of claims drawn up by the trustee (paras 26-27). At most, the court may stay the proceedings and refer the unfairness' matter to another competent, supervisory authority (paras 29 and 45). 

Unfairness assessment by the bankruptcy court 

Decision: Incompatibility with EU law. Unsurprisingly, the CJEU found Polish law incompatible with EU law. Specifically, it held that the Unfair Contract Terms Directive precludes national provisions that prevent a bankruptcy court from examining the unfairness of contract terms in a loan agreement underlying a claim included in the list of claims, or from amending that list, where no such assessment has been conducted by the authority preparing the list (para 58).

Although EU law leaves enforcement of consumer protection rules against unfair contract terms to the Member States, such national rules must comply with the principles of equivalence and effectiveness (para 40). The CJEU found that the principle of effectiveness was violated in this case. While Polish law allows a bankruptcy court to stay proceedings so that a supervisory court may assess the potential unfairness of contract terms, this process introduces delay and exposes consumers to further financial hardship. During the stay, the bankrupt's salary continues to be withheld by the bankruptcy estate, which may discourage consumers from raising objections based on unfair terms (para 46). Notably, monthly repayments set in bankruptcy proceedings are often lower than the salary amounts withheld during the proceedings (para 47), exacerbating the financial strain. Moreover, in this case, although the consumer had acknowledged all the claims listed by the trustee, this was done without legal representation and likely without understanding that an unfairness objection could be raised (para 52). The consumer only raised this issue. through legal counsel, once the case reached the bankruptcy court (para 53). The CJEU clarified that it is irrelevant whether the list of claims has become res judicata (para 55).

Interim measures by the bankruptcy court

Decision: The CJEU further ruled that national law must enable bankruptcy courts to grant interim measures to protect consumers while the fairness of a claim included in the list is under judicial review.

The Court reiterated that ensuring effective consumer protection against unfair terms may require granting interim measures, for example, adjusting monthly instalments during prolonged proceedings to prevent consumers from being forced to pay more than the amount actually due if the unfair terms were ultimately invalidated (paras 67-68). As noted by the referring court, the fear of higher interim payments to the bankruptcy estate may deter consumers from raising unfairness objections altogether (para 69). The court responsible for granting interim measures must consider: "whether there is sufficient evidence that the contractual terms concerned are unfair, whether there is a real possibility that the bankruptcy estate is already sufficiently funded to satisfy the creditors, with the exception, as the case may be, of the claim concerned, as well as the bankrupt's financial situation and the risk of that person having to endure a prolongation of the bankruptcy proceedings which could result in an unwarranted deterioration in his or her financial situation pending the conclusion of those proceedings." (para 71)

Delayed bags, immediate compensation rights - CJEU in Iberia (C-292/24)

On June 5, the CJEU issued a new judgment interpreting the Montreal convention, which governs rules for international air carriage, in the case Iberia (C-292/24). 

The case arose when passengers traveling from Frankfurt am Main (Germany) to Panama City (Panama), with a layover in Madrid (Spain), discovered that their checked-in luggage had not arrived in Panama. They reported the baggage as lost to Iberia and informed the airline that, unless they received an update within three days, they would buy replacement items and continue with their travel plans - which they ultimately did. They also had to rebook their outgoing flights from Panama City due to the delay. The luggage was eventually delivered to Panama City five days after their scheduled arrival. The passengers subsequently sought reimbursement for the cost of replacement items, additional travel expenses, and the rebooked flights. 

The legal question concerned the interpretation of the reporting deadlines set out in Article 31(2) of the Montreal Convention in cases of delayed or lost baggage. Article 31(2) states that 

'the person entitled to delivery must complain to the carrier forthwith after the discovery of the damage, and, at the latest, within seven days from the date of receipt in the case of checked baggage and fourteen days from the date of receipt in the case of cargo. In the case of delay, the complaint must be made at the latest within twenty-one days from the date on which the baggage or cargo have been placed at his or her disposal.'

The key issue was whether this deadline prevents passengers from claiming compensation for damage caused by a baggage delay before the baggage is returned, or whether they may do so only after they receive the baggage as the full scope of their damage may only then materialise. 

The CJEU adopted an interpretation of Article 31(2) of the Montreal Convention that is favourable to passengers. It held that passengers may submit a claim for damages arising from delayed baggage before the baggage is returned. According to the Court, the 21-period specified in Article 31(2) marks the latest possible moment to file a complaint - but not the earliest (para 20). By applying a literal interpretation of the provision, the CJEU found that passengers are entitled to submit a claim for compensation at any time between the moment their baggage is delayed and the expiry of the 21-day period following its return (para 21). 

Interestingly, the CJEU also noted that this interpretation benefits air carriers, as well. Early notification allows airlines to investigate the situation promptly, potentially mitigating the damage, and collect evidence to demonstrate that they took all reasonable steps to prevent the harm (paras 29-30).

Consumers' access to interim relief - the CJEU in Myszak (C-324/23)

In case C-324/23 (Myszak) the Court of Justice of the European Union was asked again to deal with the consequences of mortgage loan agreements indexed in Swiss francs. 

The case concerns a mortgage loan contract indexed in Swiss francs whose voidance was claimed by three consumers against the Getin Noble Bank S.A. Consumers claimed the unfairness of the contractual term in question, according to Directive 93/13/EEC. Accordingly, sought interim relief in court, in order to suspend the execution of the contract containing unfair terms.

Meanwhile, however, the Bank went through a resolution procedure. Polish law bars the possibility to ask interim measures against bank dealing with special resolution procedures, according to the law implementing Directive 2014/59/EU (the Bank Recovery and Resolution Directive). 

The Polish court asked the CJEU about the compatibility with Articles 6(1) and 7(1) of UCTD and Article 70(1) and (4) of the Bank Recovery and Resolution Directive of the national law. Pursuant to relevant Polish law it is not possible to grant a consumer’s application for an interim measure to suspend, during the course of the court proceedings, the obligation to pay the loan instalments under a loan agreement which is likely to be declared invalid, on the sole ground that it was granted by a bank declared to be under special resolution.

The CJEU affirmed that a statutory provision barring consumers to obtain interim relief during resolution procedures impairs consumers to exercise their rights, and thus goes against EU law.

The Court invoked the principle of effectiveness, claiming that impeding consumers to exercise their rights because of a bank’s resolution would impact on the effective enforcement of the UCTD. The Court of Justice has, on a number of occasions, made general statements on the need for national courts to be able to adopt interim measures for the full effectiveness of court decisions concerning rights granted by EU law (see, among others, Case C-213/89, Factortame).

Although the Bank Recovery and Resolution Directive allows Member States’ laws to specify and define the procedural means of its implementation, national laws implementing it should not impede consumer protection. Accordingly, a provision barring the enforcement of UCTD, precluding adoption of interim measures, is contrary to EU law.

The decision reinforces a well-established pattern in the Court of Justice’s rulings: when in doubt, in favour of the consumer!

Deferred payment option as a ‘promotional offer’: CJEU in bonprix (C-100/24)

In bonprix (Case C-100/24), the CJEU was asked to clarify the meaning of ‘promotional offers’ under Art. 6(c) of the E-commerce Directive. According to this provision, any such offers must clearly outline the conditions for eligibility. The disputed practice was an advertising message that bonprix, an online trading company, put on its website: ‘Convenient purchase on invoice’. It was contested that this message is misleading as it leaves out the fact that such a payment arrangement is subject to a prior assessment of the consumer’s creditworthiness. It is thus necessary to establish whether the message on bonprix’ website is a ‘promotional offer’ in the first place – a concept that is not directly defined under the Directive.

First, according to a literal interpretation, ‘promotional offers’ can include ‘any form of communication by which a provider seeks to promote goods or services to the recipient by giving him or her an advantage’ (para 24), which is still rather broad.

Second, according to a contextual interpretation, since Art. 6(c) of the E-commerce Directive included some illustrative examples such as ‘discounts, premiums and gifts’, for ‘reasons of consistency’, ‘promotional offers’ must have ‘the characteristics common to’ these examples (para 25). The CJEU outlined three such characteristics: the conferral of an advantage that is

1. objective, i.e. not left to ‘the subjective assessment of that recipient’ (para 26),
2.  certain, i.e. ‘does not depend on chance or selection’ (para 27, per the distinction between ‘promotional offers’ under Art. 6(c) and ‘promotional competitions and games’ under Art. 6(d)), and that is
3. ‘capable of influencing that recipient’s consumption behaviour’ (para 28).

In response to bonprix’ arguments, the CJEU added that ‘promotional offers’ are neither defined by ‘the existence of a substantial monetary advantage for its recipient’ nor by ‘its exceptional nature’ (paras 29-31). The form and extent of the advantage is ‘immaterial’ and may be ‘monetary, legal or mere convenience, such as to enable the recipient to gain time’ (para 32). In the context of the disputed practice, the CJEU highlighted some potential benefits of bonprix’ offer: the deferral of payment provides the consumer with ‘a cash advance’ and represents ‘a monetary advantage, albeit minimal’ (para 43); in the event of extinguishment of the contract due to withdrawal or termination, ‘the purchaser does not need to claim reimbursement of the price’ (para 44).

Third, according to a teleological interpretation, the CJEU confirmed that subjecting the disputed practice to Art. 6(c) of the E-commerce Directive can ‘contribute to a high level of consumer protection, without, however, entailing unreasonable economic burdens for service providers’ (para 34). By informing the consumer that the deferred payment option is subject to a creditworthiness test and thereby making the consumer realise that they may be refused the option, it ensures consumer protection ‘at all stages of contact between the provider and the recipient of a service’ (para 35). Finally, the CJEU also added that its interpretation of Art. 6(c) of the E-commerce Directive is fully compatible with the Unfair Commercial Practices Directive (particularly its Art. 3(4) and its general prohibition of misleading practices) and the Consumer Rights Directive (particularly its Art. 6(8)).

The Court’s broad interpretation of ‘promotional offers’ should be welcomed as a positive move to strengthen consumer protection through information. It represents a more inclusive understanding of the factors that drive consumers’ purchase decisions, in particular convenience. Of course, it should also be borne in mind that the disputed practice in this case is in any event a ‘commercial practice’ within the scope of EU law.

Comparison websites outside scope of comparative advertising: CJEU in HUK-Coburg (C‑697/23)

For those who are on the lookout for good value for money, price comparison websites are a go-to tool. While ‘comparative advertising’ is regulated by Directive 2006/114/EC, it is unclear whether comparison services offered by third-party websites fall within its scope. The CJEU clarified this point in Case C‑697/23.

The case concerned Check24, a website that compares various products, including insurance packages, by awarding scores based on criteria like price. The website also enables, as an intermediary, the conclusion of contracts between customers and insurance providers. HUK-Coburg, whose insurance products were listed on Check24, sued the platform for violating the objectivity requirement under Art. 4(c) of Directive 2006/114/EC. Though the question pertains to the interpretation of Art. 4(c), the CJEU instead focused on the scope of the Directive, namely its definition of ‘comparative advertising’ under Article 2(c).

The CJEU first recalled that the key element of ‘comparative advertising’ is the identification of ‘a competitor’ – either of the advertiser or of the advertised goods/services. Thus, Check24 must be a competitor of HUK-Coburg to fall under the scope of the Directive (para 28). To assess this, the CJEU proposed ‘an analysis of the possible substitutability of the services offered by the parties […] in order to determine whether they operate in the same market’ (para 34, emphasis added). Pending further verification by the referring court, the CJEU pointed out that Check24 itself does not provide insurance services but merely offers comparison and intermediary services, meaning that it offers non-substitutable services to those of HUK-Coburg and operates in a different service market (para 37). The concept of ‘comparative advertising’ under Article 2(c) thus does not include such an online comparison service or such a mere intermediary service.

While it makes sense that third-party comparison services are not regulated as comparative advertising between competitors, these services are still subject to other consumer protection instruments, such as the Consumer Rights Directive and Unfair Commercial Practices Directive, which, according to the Commission, remain under-enforced.

On the Transparency Requirements of Arrangement Fees – CJEU in Justa v Banco Bilbao Vizcaya Argentaria SA (Case C-39/24)

Consolidating Caixabank SA (C‑224/19) and CaixaBank SA (C‑565/21) in Case C-39/2024 of 30 April 2025, the Court of Justice (CJEU) ruled on the transparency of arrangement fees and further clarified the threshold for meeting its requirements. 

Facts of the case

In November 2005, Just and Banco Bilbao Vizcaya Argentaria concluded a loan agreement secured by a mortgage. According to the contract, upon signing the agreement, Justa had to pay an arrangement fee equal to 0.25% of the capital loan. Justa brought an action before the Court of First Instance of Ceuta against Banco Bilbao seeking a declaration that the term establishing the arrangement fee was unfair. 

Question referred

The Court of First Instance of Ceuta referred two questions, one of which is admissible. The second, regarding the application of Directive 2014/17/EU is inapplicable ratione temporis.

By the admissible question, the referring court is asking whether Article 4(2) of Directive 93/13/EEC on Unfair Terms in Consumer Contracts (hereinafter, UCTD) must be interpreted as precluding the case law of the Tribunal Supremo (Supreme Court) which considers the term imposing an arrangement fee to remunerate services ‘connected with the examination, granting or processing of the mortgage loan’, to be transparent without the term specifying the services supplied in exchange for the fee or the time needed to perform them (para 28). 

Ruling

First, the CJEU observes that a term establishing an arrangement fee cannot be considered as pertaining to the main subject matter of the contract. The essential obligations of a credit contract are in fact that the lender ‘undertakes (…) to make available to the borrower a certain sum of money and that the latter undertakes (…) to repay that sum’ (para 31). With this, the CJEU further consolidates its ruling in Caixabank and Banco Bilbao Vizcaya Argentaria (C-224/19 and C-259/19, EU:C:2020:578, para 64). 

Irrespective, Article 5 of the UCTD imposes the same requirement for transparency for contractual terms in writing, which, as per that provision, must ‘always’ be written in plain and intelligible language. As already noted in 2023 in Caixabank (Loan arrangement fees), C-565/21, the requirement for transparency of Article 4(2) has the same scope as the requirement laid down in Article 5. Therefore, the question of the referring court must be reformulated with reference to Article 5 instead of Article 4(2). 

The CJEU holds that the requirement should not be understood as only demanding that the terms are formally and grammatically intelligible. The transparency of the terms must be understood broadly, in light of the provision’s rationale that is to protect consumers’ weaker position vis-à-vis businesses (see also Caixabank (Loan arrangement fees), C-565/21, EU:C:2023:212, para 30). The consumer must be able to understand what ‘economic consequences’ derive for her or him from the term (para 38, emphasis added) and the ‘nature of the services’ she or he receives (para 39, emphasis added). 

The national court will be in charge of determining whether the financial institution has provided sufficient information for her or him to understand the content and functioning of the term (para 40). The court will thus assess the transparency of the terms, taking into consideration ‘all the relevant factual elements’, which include also the advertising that the bank makes of the particular agreement (para 41; see also Caixabank (Loan arrangement fees), C-565/21, EU:C:2023:212, para 40). 

To summarise, the transparency requirement is intended to ensure that the consumer can assess the financial consequences of the term. Crucially, the requirement does not entail that the bank must detail the nature of the services supplied or the number of hours devoted to offering those services (para 44). 

The Court concludes that, like in the case at hand, where the legislation defines the term imposing the arrangement fee as remuneration for services connected with the examination, granting or processing of the mortgage loan, it is not necessary that the term includes ‘a detailed description of the nature of those services or an indication of the time devoted to their performance’ (para 47). 

It is however necessary that ‘the consumer has indeed been placed in a position to assess the economic consequence for him or her, to understand the nature of the services (…) and to ascertain that there is no overlap between the various costs provided for in the contract or between the services for which those costs are paid’ (para 47).

The national case law of the Supreme Court is thus not precluded by Article 5 of the UCTD. 

A milestone for Polish consumers claiming unfairness of Swiss francs mortgage loans - CJEU in Lubreczlik (C-396/24)

Yesterday, the CJEU issued a new judgment in the Swiss franc mortgage loans and their unfair contract terms saga, following a referral from a Polish court, in the case known as Lubreczlik (C-396/24). The referral was based on two cases, in which consumers concluded mortgage loans indexed to the Swiss franc rate. In both cases consumers claimed repayment of sums they had paid to the bank on the basis of their mortgage contracts being void due to unfair contract terms they contained. The bank counterclaimed seeking that consumers paid the full loan amount back to the bank. 

Previously, the Polish Supreme Court issued a judgment with a so-called 'two claims' theory (see declaration III CZP 11/20 from 16 February 2021 - in Polish here). This theory acknowledged that after a loan agreement is declared invalid, both parties (consumer and lender) have a right, "distinct and independent of each other, to repayment of monetary payments made in performance of that agreement. Each of the parties could therefore claim full repayment of the sums paid, whether or not it is still a debtor of the other party and regardless of the amount of its own debt" (para 26).

Imagine now situations (very common in practice), in which consumers have already paid the whole amount of their loan to the bank, or even paid to the bank sums exceeding the total loan value, on the basis of high interest rates. While waiting for their claims of unfairness to be adjudicated by Polish courts or the judgments to become final and the bank to return their money to them, they receive a lawsuit from the bank for the repayment of the full amount of the loan. Often, such a (de facto, repeated) repayment would either be financially impossible or significantly detrimental to consumers (even if made in the expectation of the eventual repayment by the bank of the same or higher sum of money) (para 27). Further procedural rules make it also feasible that any repayment by a consumer of the money to the bank will be immediately enforceable, while the bank's obligation to repay the consumer may take a long time to reach that stage (para 32). Consumers could theoretically argue for a set-off of reciprocal claims, but Polish procedural rules make such a declaration complex and not necessarily favouring consumer interests (para 28).

Repayment of the loan amount by a consumer

The CJEU leaves no doubt that Polish (case) law may not allow banks to claim repayment of the full loan amount, regardless of the value of repayments already made by consumers in performance of the loan agreement and "irrespective of the amount remaining due" (para 44). The CJEU recalls the need for the Member States to ensure that the national protection against unfair contract terms is a deterrent for sellers and suppliers against embedding such terms in their contracts (para 38). Further, national law needs to protect consumers against the detriment of having their contract's annulled as a result of them containing unfair contract terms (para 39). These obligations may result in Polish courts being required to "change established case-law", if following such national case law would lead to undermining EU consumer protection's objectives (para 43).

Polish courts should then disregard the Polish Supreme Court's theory of "two claims" in assessing the banks' claims for repayment of the full amount of loan by consumers, if consumers already had paid back at least part of the mortgage loan to the bank. This should mean in practice that banks claims filed against consumers should be scaled down in consideration of the actual repayments that consumers have already made. Strategic litigation by banks against consumers for the repayment of full loan amounts becomes much more risky as a result of this judgment.

Immediate enforceability of consumer repayments

The CJEU also addressed the matter of Polish courts being required to award of their own motion immediate enforceability to repayment claims made by banks against consumers, if consumers accepted such claims (and they may have good reasons to accept them - see para 51 of the judgment for more information). The Court considers also this practice contrary to EU consumer protection objectives, as long as Polish courts are not allowed to consider in their decision-making detriment to the consumer that such an immediate enforceability order would have (para 58). 

This part of the CJEU's judgment protects consumers against the immediate need to repay the money to the bank, which could have dissuaded them from progressing with their unfairness claims.

Overall, this judgment raises financial risks for these banks that were not keen so far to settle consumer cases and which have used various intimidation tactics to dissuade consumers from pursuing their claims. It may also lead to banks proposing more beneficial settlements to consumers and encourage consumers to negotiate settlement terms.