this post was submitted on 20 Jun 2024
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I'm many EU countries there is a state-run Credit Bureau of sorts that keeps track of each citizen's debt.
The debt data is only available to banks and usually reduced only to the answer to the question "can this person be allowed to take on this credit". So not what their running debt is but only whether they can take on a new, specific one.
The rules for determining that vary from state to state but generally it's related to the person's income and not allowing their credit payments to drop that income below what's considered viable. Some states may use a percentage on top of that.
For context, most people in EU do not usually use credit in day to day life, only debit.
They tend to resort to credit for large purchases, the most common being a house/apartment or a car. Some stores may offer the ability to resort to credit for things like home appliances (refrigerators, AC, washing machines/driers etc.) that can put a strain on a person's finances. Some may even offer it for more trivial purchases. These deals go through a bank as well and become a rate that you have to repay monthly. It is not related to a credit card.
There are other types of credit that are related to cards and resemble what you are familiar with in the US — ability to spend above the money you actually have and some perks on top of that. But they still work like a regular credit, they are done by banks, they are recorded at the Credit Bureau, they count towards your total indebted ability etc.
In the US people also use credit card purchases add a form of shopper assurance. In the EU this is done by the state. The entire EU has strong consumer rights in the law and there are state run national and regional consumer bureaus that will take complaints, investigate and fine the company. The law is very consumer friendly and puts the burden of responsibility on the company/bank in the case of unauthorized/unproven purchases.
You can reverse payments through the bank in the EU as well but it's seldom necessary, since the companies tend to revert the charge willingly when confronted by the consumer protection bureaus.
I've only had to resort to bank reverse a couple if times.
One was when I ordered a pair of shoes of what appeared to be an Italian website. It later turned out it was a scam site that listed popular models that were not made anymore and then sent you a ridiculously poorly made knock-off copy from China. I explained the issue to my bank and showed the knockoffs I got and a week or so later the charge was reversed.
The second was while vacationing in another EU country, I started getting the same amount withdrawn (about €50) from the card each day by an entity in the country I was visiting. No idea if it was a scam or some sort of automated payment gone wrong. I blocked the card and contested the charges and they were reversed.
I knew the criteria was out of the hands of EU-based lenders, but didn’t realise the data is also out of reach to the lender. I suppose it makes sense that the lender would get no info other than a yes or no, if lenders have no discretion.
I noticed A shop had a rediculously priced phone (like €800+, something I would never buy) but advertised something like €9 if you take a contract. So it’s effectively a loan factored into a locked-in phone service plan. IIUC, the phone shop must arrange that with a bank and does not have the option of taking on risk, and then the bank asks the central bank if customer X can handle that loan, correct?
That’s quite a surprise. I heard SWIFT/IBAN transfers were permanent and irreversable. I heard of mistakes being corrected but it required the two banks to collude and the bank of the recipient to do a money grab on their account, which I suppose would be impossible if a criminal closes their account. I wonder if your bank took a loss or if they colluded with the other bank. IIRC, banks have a minimum “investigation” fee of like €25 plus an hourly rate to pay bankers to deal with bad transactions. Did your bank offer that service for free?
That's correct, any and all loans go through a bank. But please note that the bank won't advise if it's a bad loan, for example a ridiculously overpriced phone and/or phone plan. They just check if you can afford the monthly payment.
These were card payments not transfers. Any payment done with a card, whether online or at a POS machine, can be reversed. And yes it was done for free in both cases.
Debit card payments are typically SEPA direct debit
Direct debit transactions are done by companies not by the customer. They're used for allowing utility companies to pull the monthly bill automatically from the subscriber's account.