Introduction
With the acceleration of digitalization, money transfer transactions have moved from traditional banking methods to mobile applications, electronic fund transfer systems (“EFT”), fast fund transfer systems (“FAST”), QR code payments and electronic wallets. According to data from the Central Bank of the Republic of Turkey (“CBRT”), the volume of transactions carried out through the FAST system exceeded TL 2.1 trillion in 2023, with an average of 15 million transactions per day. These digital payment methods, which have become an indispensable part of daily life, provide great convenience to users, but also pose significant legal problems in terms of erroneous transactions.
In particular, transfers to the wrong person, sending the wrong amount, performing the same transaction more than once or unnecessary payments due to system errors are common problems in practice. According to data from the Banking Regulation and Supervision Agency (“BRSA”), a significant portion of consumer complaints are related to erroneous or unauthorised electronic transactions. The main legal institution that comes into play in these cases is the restitution of unjust enrichment regulated under Articles 77-82 of the Turkish Code of Obligations No. 6098 (“TCO”).
Unjust enrichment is a debt relationship that provides for the return of the increase in the assets of a person without a justifiable reason, within the limits of the enrichment. In terms of practice, the increase in the assets of the wrong recipient in digital payment transactions without any legal reason can be considered as a contemporary version of unjust enrichment in the classical sense. However, the speed and technical characteristics of digital transactions create more complex problems than traditional legal assessments. Factors such as the completion of FAST transactions within seconds, the limited ability of banks to intervene in erroneous transfers, the irreversible nature of crypto-asset transfers and the ability of wrong recipients to quickly consume the money have created new issues that need to be resolved in this field.
The purpose of this article is to examine how to evaluate the erroneous transfers occurring in digital payment systems within the framework of unjust enrichment law, the scope of the obligation to return, the liability of banks and the disputes encountered in practice from the perspective of Turkish law.
The Concept and Legal Nature of Unjust Enrichment
Definition of Unjust Enrichment
Article 77 of the TCO defines unjust enrichment as “an increase in the assets of one person to the detriment of the other without a just cause”. The purpose of this regulation is to eliminate an unfair economic gain by ensuring that the enriched person returns the advantage obtained in cases where the balance of assets is disturbed. The legal nature of unjust enrichment is accepted as a debt relationship arising from the law.
Elements of Unjust Enrichment
There are four basic elements of unjust enrichment:
Enrichment: The element of enrichment occurs when a person obtains an increase in his/her assets as a result of an erroneous digital transfer. In digital payments, enrichment is embodied by the amount of money transferred to the bank account.
Impoverishment: Impoverishment occurs when the sender experiences a decrease in his/her assets as a result of the erroneous transfer. In digital payment systems, the sender can easily prove this element with bank transactions.
Link of causation: There must be causality between the decrease in the assets of the sender and the increase in the assets of the recipient. In digital transfers, this element is generally not problematic, because electronic records clearly trace the movement of money from the sender to the recipient. In FAST and EFT systems, each transaction is recorded with a unique reference number, which makes it easier to prove causation.
Absence of just cause: Just cause is the legal reason that legitimises the enrichment. Since there is no legally valid reason for the transfer to the wrong recipient, erroneous digital transfers directly constitute unjust enrichment.
In digital payments, the absence of just cause is usually clear, i.e. there is no debt relationship between the sender and the wrong recipient. However, in some cases a dispute may arise:
- If there is a prior debt relationship between the parties but the amount is incorrect
- If the sender has made a transfer to the wrong person thinking that he has paid his debt
- If the recipient thinks that the money was sent to him as a gift
In these cases, the existence of just cause must be assessed according to the characteristics of the concrete case.
Obligation to Return and its Limits
Pursuant to Article 79 of the TCO, the enricher is obliged to return the enrichment that remains in his hands. An important distinction is made in the text of the Article between the good faith and the malicious enricher.
Liability of the Good Faith Enricher
Good faith means that the enricher does not know and cannot be expected to know that the enrichment is not based on a just cause. Pursuant to paragraph 1 of Article 79 of the TCO, the good faith enricher may be released from the obligation of restitution if he proves that the enrichment has ceased. Therefore, the assessment of good faith is of special importance in digital payments.
Liability of the Unjust Enricher
The unjust enricher cannot claim that the enrichment has disappeared. Pursuant to paragraph 2 of Article 79 of the TCO, the unjust enricher is liable for all gains and other benefits deprived. In this case, the enricher is obliged to return the money in full, even if he has spent it.
The main controversy in digital transfers is whether the wrongful recipient is considered to be “bona fide” and whether the obligation to return the money continues after it has been consumed. In practice, the Court of Cassation accepts that if a person withdraws or uses the money received in his/her bank account in error, he/she can easily be deemed to be in bad faith according to the objective good faith criterion.
Relationship with Mistake (Art. 31 TCO)
Pursuant to Article 31 of the TCO, a person who makes a declaration of will is not bound by the contract if he is in a fundamental mistake. However, in digital transfers, there is not a “contract”, but a unilateral declaration of will (payment instruction). Therefore, in order for the provisions on mistake to be applicable, there must be a counterparty (the bank or the wrong recipient) and the mistake must be evaluated within the framework of this relationship, whereas this is not the case when a unilateral transmission is made with a payment instruction.
Statute of limitations
Pursuant to Article 82 of the TCO, the right of claim arising from unjust enrichment is time-barred within two years starting from the date the right holder learns of this right, and in any case within ten years starting from the date the enrichment occurs. The beginning of the statute of limitations is important for digital payments:
- Two-year subjective limitation period: It starts from the date on which the sender learns of the erroneous transfer. Due to push notifications in digital banking, this period usually starts on the date of the transaction.
- Ten-year objective limitation period: It starts from the date of the enrichment, i.e. the date of the transfer.
Digital Payment Systems and the Problem of Incorrect Transfer
Digital Payment Types and Legal Framework
The digital payment ecosystem consists of EFT, wire transfers, FAST, QR code payments, mobile wallets, payments made through electronic money institutions and crypto asset transfers. The common feature of these systems is that transactions are carried out at high speed and user errors are difficult to recover.
Traditional Electronic Transfers (EFT/ Wire Transfer)
EFT and wire transfer transactions are regulated under the Law No. 6493 on Payment and Securities Settlement Systems, Payment Services and Electronic Money Institutions (“Payment Services Law”). These transactions are usually completed on the same day or the next business day and have a certain revocation period.
Faster Payment System (FAST)
FAST, launched by the CBRT in 2020, is a payment system that operates 24/7 without interruption and transactions are completed within seconds. The most important feature of FAST is that transactions are irrevocable. The payment order is finalised as soon as it enters the system and is immediately transferred to the recipient’s account.
This feature creates a significant problem in terms of erroneous transfers. While traditional EFT has a processing time of a few hours, this time is almost zero in FAST. Therefore, the possibility for the user to realise and correct his/her mistake is extremely limited.
QR Code Payments and Mobile Wallets
QR code-based payments and mobile wallet applications further accelerate the payment process. In these systems, the user pays by scanning the QR code or using NFC technology. In case of incorrect QR code scanning or entering the wrong amount, there is no possibility of reversal as the transaction is completed instantly.
Electronic Money Institutions
Electronic money institutions operating under the Payment Services Law provide non-bank payment services. Erroneous transfers made on these platforms are subject to the same legal regime.
Crypto Asset Transfers: A Special Problem Area
Crypto asset transfers constitute the most problematic area amongst digital payments. The main feature of blockchain technology is that transactions are irreversible. Once approved, a crypto asset transfer is technically irreversible.
Unjust enrichment claim in crypto assets:
In Turkish law, crypto assets are not yet comprehensively regulated. However, the general provisions of the TCO are applicable. A person who sends crypto assets to the wrong wallet address may file an unjust enrichment lawsuit if he/she can identify the recipient.
However, the following problems arise in practice:
- It may be necessary to request information from cryptocurrency exchanges to identify the recipient
- If the buyer is abroad, international legal assistance is required
- It is unclear how the return of the cryptoasset will be technically realised (in-kind return or cash return?)
- How to calculate the change in value is controversial
In our opinion, in crypto-asset transfers, the malicious enricher should return the higher of the value at the time of transfer and the value at the time of return. In addition, if it is not possible to return the crypto asset in kind, a cash refund should be made at the market value at the time of return.
Legal Characterisation of Wrongful Transfer
Errors made during digital transfers are mostly:
- Sending to the wrong recipient (account number, IBAN or wallet address error)
- Transfer of incorrect amount (decimal point error, addition of extra zero)
- Multiple execution of the same operation (double click, system delay)
- System-related duplicate transfers (technical error of the bank or payment system)
Responsibility and Liabilities of the Bank
General Principles
Banks act as intermediaries that fulfil customers’ instructions. Under the Payment Services Act, the payment service provider is responsible for the correct execution of the payment transaction. This responsibility is limited to the bank’s correct fulfilment of the customer’s instruction.
Thus, if the customer provides an incorrect account number, the bank is obliged to make a payment to that account. The Bank is not obliged to check the accuracy of the account number.
Bank’s Liability Cases
The Bank may be held liable in the following cases:
- a) System failure: In the event that a transfer is made to the wrong account due to the bank’s own software or system, the bank shall be held negligently liable. The customer may demand compensation from the bank in accordance with Article 112 of the TCO.
- b) Misleading the customer: The bank may be liable if the customer is given incorrect information by bank personnel or through digital channels.
- c) Inadequacy of security measures: Since the payment service provider has an obligation to take security measures, the bank may be liable if it fails to take the necessary security measures to prevent unauthorised transactions.
- d) Breach of information obligation: Since banks are obliged to provide their customers with sufficient information about payment transactions, the breach of this obligation may lead to the bank’s liability.
Authorisation of the Bank to Reverse the Erroneous Transfer
As a general rule, banks cannot return the erroneous transfer to the other party upon the unilateral request of the sender. The main reason for this is that the bank cannot dispose of the assets of the account holder without his/her consent.
Evaluation of Erroneous Digital Transfers in terms of Unjust Enrichment
Enrichment Element
Enrichment occurs when the money is transferred to the wrong recipient’s account through an erroneous transfer. Here, the fact that the recipient has spent the money does not eliminate the initial existence of enrichment; it may only affect the scope of the restitution obligation.
Pursuant to Article 79 of the TCO, the obligation of restitution is limited to the “enrichment retained”. However, as explained above, this rule applies only to the good faith enricher.
Impoverishment of the Sender and the Issue of Proof
The sender can easily prove impoverishment by means of receipts, bank records and transaction diary. In digital transactions, there is no significant problem in terms of the burden of proof; the main dispute is whether the enriched person has spent the money and whether he/she can benefit from any presumption of good faith.
Means of proof:
- Bank receipt and transaction confirmation message
- Account statement
- FAST/EFT reference number
- Mobile banking screenshots
- Written declaration of the bank
Good and Evil of the False Recipient
The assessment of good faith is more difficult in digital transfers than in classical cases. In practice, the following criteria are taken into account:
- “Unusual” receipt of money in the recipient’s account,
- The recipient is in a position to realise that the money does not belong to him,
- The sender has reached the recipient by the bank,
- The recipient continues to use the money despite notification,
- Failure of the enriched person to investigate the cause of the enrichment.
According to the practice of the Court of Cassation, a reasonable person who follows the account movements is expected to realise that money that does not belong to him has been transferred to his account. Therefore, in digital transfers, the wrong recipient becomes malicious in most cases in a short time.
Scope of the Return Obligation
Evil enricher:
- Principal,
- All the benefits he gets from using money,
- If the currency appreciates, this increases,
- Expenses saved by using the money
is obliged to return the money.
The benevolent enricher shall return the remaining amount in his/her possession; if he/she has consumed the money, he/she may be released from liability. However, it should be noted that this protection has no practical effect since the goodwill period is generally very short in digital transfers.
Court Decisions
Within the framework of the decision of the 12th Civil Chamber of the Istanbul Regional Court of Appeals dated 19.12.2024, 2022/906 E., 2024/1882 K., it is accepted that in EFT transfers made to the wrong recipient in digital payments, the bank did not cause the error and can set off the money transferred to its account against the debt within the scope of the general loan agreement, and it is ruled that only the recipient company can be held liable in case of unjust enrichment of the recipient; this decision concretises the importance of good faith-bad faith assessment in digital payments and the obligation to return the wrong recipients in accordance with Article 77 of the TCO and the following unjust enrichment provisions.
Similarly, the decision of the Istanbul Regional Court of Appeals, 43rd Civil Chamber dated 2021/32 E., 2024/257 K., 27.2.2024 sets forth the issue of wrongful transfer and unjust enrichment in digital payments with a clear example. The plaintiff company instructed the recipient’s IBAN and name information in a USD 400,000 wire transfer abroad, but the defendant bank transferred the money to a third party’s account without checking the IBAN match with the recipient. The court of first instance found the bank liable for failure to fulfil its duty of care and awarded damages. However, the Court of Appeal dismissed the case, stating that the money did not pass into the bank’s assets, therefore the unjust enrichment claim directed directly against the bank was legally invalid and the plaintiff failed to prove that damage had occurred. The decision is important in terms of showing that although banks have a heavy objective duty of care in the digital payment errors discussed in the article, the liability may be limited in the amounts transferred to the account of the third party and the proof of damage belongs to the plaintiff.
In the decision of the 11th Civil Chamber of the Court of Cassation, 2016/2980 E., 2017/2998 K., dated 24.5.2017, the legal consequences of money transfer in unjust enrichment based receivable cases are also revealed. In this case, the plaintiff claimed that 25.000 TL, which was transferred to the defendants without the consent of the bank customer, was unfairly transferred and claimed compensation. The court of first instance determined that one of the defendants received the money transfer in return for a receivable and dismissed the lawsuit in respect of the other defendants, and accepted the lawsuit only in respect of a certain defendant. The Court of Cassation reversed the decision of the court of first instance with respect to the relevant defendants, stating that the defendant acquired the money in good faith and the conditions for unjust enrichment were not met, and that the criminal proceedings of the defendants have not yet been completed and should be made a matter of waiting for the determination of their liability. The decision is important in terms of showing that in order for the unjust enrichment claim to be realised, the money must change hands unjustly and in a revocable manner, and that the lawsuit may be dismissed in case of good faith acquisition.
Conclusion
The rapid and widespread adoption of digital payment systems has increased the number of wrongful money transfers, and unjust enrichment has become a fundamental remedy in the digital economy. Instant and irreversible payments such as FAST and anonymous and technically irreversible transfers in crypto-assets make the assessment of good faith and bad faith even more important for the wrongful recipient. According to the Court of Cassation, since the person who receives an unusual amount of money in his/her account has the obligation to investigate this, the wrong recipient in digital transactions is generally considered to be malicious in a short period of time and cannot be relieved from the responsibility of return even if he/she has spent the money.
The liability of banks, on the other hand, depends on whether the error is caused by the user or the technical system of the bank; whilst the possibility of intervention of banks is limited in user errors, contractual liability arises in system-related errors. As a result, the speed, anonymity and technical complexity of digital payment systems make it difficult to apply classical unjust enrichment rules and create the need for more detailed, technology-compatible regulations, especially for crypto-assets.
