Termination without notice at N26 without sufficient communication

The bank N26, which has increasingly made the headlines, is once again getting negative press: The company has terminated numerous accounts without notice and without giving specific reasons. In addition, it appears to have withheld residual credit balances without giving any reasons.

Violation of terms and conditions

According to Handelsblatt, numerous customers from various European countries are affected. As a reason for termination in all cases known and confirmed so far, the violation of the terms and conditions was given. What exactly this violation consisted of was not communicated by N26. Those affected are therefore often left guessing.

Niels Nauhauser from the consumer advice center in Baden-Württemberg commented on the events in the Handelsblatt newspaper and pointed out that the bank must make it clear in the notice of termination what the specific reason for termination is. According to the General Terms and Conditions, termination without notice is only possible in three specific cases: in the event of false information on financial circumstances, in the event of a significant deterioration in financial circumstances, and in the event of failure to meet the obligation to provide or increase collateral within a period set by the bank.

None of the three reasons was explicitly stated to the persons concerned. Nevertheless, in some cases access to the accounts was blocked with immediate effect. In other cases, those affected can still log in but can no longer make transactions.

Money disappeared, withdrawals not possible

Particularly piquant seems to be the fact that in some cases the entire balance on the part of N26 was debited from the account of those affected. Where the money has disappeared, with what legal basis N26 acts and how the affected can defend themselves, is unknown. However, only a few of those affected received information letters. In these, it is pointed out that the payout of the remaining balance is currently not possible. N26 also asks for proof of the origin of the funds in the affected accounts – only then can the possibility of a payout be examined again.

This wording is interpreted as an indication that the terminations and freezes came about in the context of curbing suspected money laundering activities. In this context, Nauhauser pointed out that the nature of the action indicates that it was not being taken as part of routine controls.

Problems with illegal activities

In the past, the bank had massive problems with illegal activities. Its accounts were frequently used to launder money and transfer it abroad. In this context, several financial regulators have taken action against N26. For example, the German financial regulator Bafin has restricted new customer growth, while the Italian regulator prohibited the company from signing contracts with new customers. Before further growth is possible, N26 must therefore resolve its money laundering issues.

In this context, the company has recently invested heavily in upgrading its security department. The current events also indicate that N26 is screening its customers across the board and issuing terminations pre-emptively and without further examination if there are indications of money laundering activities. It is doubtful, however, that the company’s problems can be solved with such an approach: those affected whose accounts were wrongfully terminated may be entitled to compensation claims. Nauhauser therefore advises keeping a record of all costs incurred in connection with the termination.