Unfair terms introduced to the detriment of the consumer in contracts concluded with them are null and void under the Consumer Protection Act No. 6502. Items such as file charges and transaction charges that banks insert into loan agreements, and the sums collected in reliance on them, are likewise regarded as being of this nature. In its recent judgments, the Court of Cassation accepts that no sum may be demanded from the consumer other than the expenses that are genuinely necessary for the loan to be extended.
In practice, however, a great many items that are not necessary are seen to be collected from the person taking out the loan. Consumers who have been obliged to make payment on account of these provisions, which are in the nature of unfair terms, may seek the return of the sums they have paid.
The sequence to be followed is clear: the claim is first addressed to the bank, and if it is refused, recourse is had to the courts. That said, for claims falling below the monetary thresholds that are updated each year and announced in the Official Gazette, an application must be made to the Consumer Arbitration Committee before an action is brought.
The Limitation Period for Restitution Claims
The charges a bank may demand from the consumer are limited to expenses that are necessary, reasonable and evidenced by documents for the purposes of extending the loan. It is not legally possible to collect items that do not bear these characteristics or that cannot be evidenced. Despite this, a large number of items are observed to be passed on to the consumer under names such as loan allocation fee and file charge.
These so-called charge items in consumer loan agreements signed without any opportunity for negotiation are in essence in the nature of unfair terms and are invalid. Consumers who have been compelled to make payments of this kind may reclaim the sums they have paid within a certain period.
Which limitation period is to apply remained a matter of debate for a long time. By a leading judgment of the Court of Cassation, it has been accepted that, in the restitution of file charges, the Turkish Code of Obligations No. 6098 and its ten-year general limitation period apply. Accordingly, all file charges collected within the ten-year period running back from the date of the application may be made the subject of a restitution claim.
Moreover, where a person asserting that an unlawful deduction was made from them under the name of a file charge commences enforcement proceedings for that claim, the limitation period is suspended. The relevant part of the judgment of the 13th Civil Chamber of the Court of Cassation on the subject, File No. 2017/7144, Decision No. 2018/10219, dated 5.11.2018, reads as follows:
Court of Cassation, 13th Civil Chamber, File No. 2017/7144, Decision No. 2018/10219, dated 5.11.2018
“Under Article 125 of the Code of Obligations No. 818, which was in force on the date the file charge was collected from the claimant, the limitation period in actions for debts founded on a contract is 10 years, and the ten-year contractual limitation period must be applied in the case at hand as well. The grounds interrupting the limitation period are regulated in Article 133 of the same statute, while Article 135 of that statute provides that, once the limitation period is interrupted, a fresh period begins to run from the moment of interruption. The institution of enforcement proceedings for the collection of the debt is one of the grounds interrupting the limitation period enumerated in Article 133 of the Code of Obligations No. 818. In these circumstances, since it is apparent that the limitation period was interrupted and a fresh period began to run when the claimant commenced enforcement proceedings on 18.08.2014, before the ten-year limitation period had expired, and that the claim had therefore not become time-barred on the date of the application to the Yenimahalle Consumer Arbitration Committee, a judgment consistent with the ensuing conclusion ought to have been given; the giving of a judgment in the terms set out, on the basis of an erroneous assessment, is contrary to procedure and to law, and the request of the Office of the Chief Public Prosecutor at the Court of Cassation for reversal in the interests of the law must for that reason be allowed.”
Addressing the Restitution Claim to the Bank
In settled practice, consumers take the first step by approaching the bank from which they took out the loan. At this stage it is appropriate first to request from the bank a detailed statement setting out the charges collected item by item.
Once the statement has been obtained, the restitution of the sums unlawfully collected should be notified to the bank in writing. In terms of proof, the safest method is to convey the demand by way of a notice served through a notary or by registered post with acknowledgement of receipt.
It is well known that banks for the most part do not meet applications of this kind and avoid making payment. Where the demand is refused, the dispute must be taken to the judicial route.
The Competent Consumer Arbitration Committee
The Consumer Arbitration Committees, which sit in every provincial and district centre within the governorships and district governorships, are tasked with determining consumer disputes. Where the value of the dispute falls below a certain monetary threshold, an application to the committee is mandatory before going to court. That threshold was set at TRY 15,430 for 2022. In disputes above that amount no application may be made to the committee; an action must be brought directly before the Consumer Court.
The division of jurisdiction is as follows:
- In the centres of provinces without metropolitan status and in their districts, provincial consumer arbitration committees hear disputes below TRY 15,430.
- In metropolitan municipalities, where the value of the dispute is below TRY 10,280, the district consumer arbitration committees have jurisdiction.
- In metropolitan municipalities, jurisdiction over disputes between TRY 10,280 and TRY 15,430 lies with the provincial consumer arbitration committees.
The instrument setting out these monetary thresholds applicable for 2022 may be accessed via the Official Gazette.
Which committee has territorial jurisdiction is governed by Article 7 of the Regulation on Consumer Arbitration Committees. Under that provision, the committee for the place where the consumer resides has jurisdiction, as does the committee for the place where the head office or the branch of the bank from which the loan was taken is located.
Since a decision of the committee has the character of a court judgment, it is possible to commence enforcement proceedings in accordance with the decision.
The Court with Subject-Matter and Territorial Jurisdiction
In actions for the recovery of file charges paid in connection with a loan, subject-matter jurisdiction lies with the Consumer Court.
In determining territorial jurisdiction, the general jurisdiction rules of the Code of Civil Procedure No. 6100 and the jurisdiction rule laid down in the Consumer Protection Act No. 6502 are applied together. Within this framework, the action may be brought before the court of the place where the respondent bank is located, and equally before the court of the place where the consumer resides.
Court Fees and Litigation Costs
Bringing an action before the Consumer Courts is not subject to a court fee. It is sufficient to deposit with the court an advance on costs for items such as service of process. That said, in files requiring an examination by a court-appointed expert, the expert’s fee must also be met by the consumer during the proceedings. If the proceedings conclude in the consumer’s favour, it is ordered that all of these costs be paid to the consumer by the respondent.
There is one point here that should not be overlooked: not every sum taken by the bank in connection with the loan is regarded as an unfair term. In actions brought without drawing this distinction, a partial or complete dismissal may result, and in the event of dismissal an order for the opposing party’s legal costs may be made against the claimant consumer.
Another dimension of the subject arises from competition law. By its decision No. 13-13/198-100 of 08.03.2013, the Competition Board established that 12 banks that had formed a cartel among themselves had infringed the provisions of the Act on the Protection of Competition No. 4054. A great many consumers, asserting that they had been obliged to pay excessive sums on account of these acts distorting the free competitive environment, have had recourse to litigation.
The details of that cartel arrangement and of the Competition Board’s decision, and the stage reached by cartel damages claims, are addressed in our note entitled Infringement of the Competition Act and Cartel Damages.
Independent Legal Assessment
In file charge disputes, the element determining the outcome is the quality of the preparation rather than the amount of the claim. A detailed statement of charges obtained from the bank shows both which items were genuinely necessary and enables the sum to be claimed to be calculated correctly. Including necessary and documented expenses in the claim as well brings with it the risk of partial dismissal and an order for the opposing party’s legal costs.
Managing time limits is at least as important. Since the ten-year limitation period runs backwards, applications must not be delayed in claims relating to older loans; steps that interrupt the limitation period, such as enforcement proceedings, may prove decisive in preserving the right.
When a file is being devised, we recommend that attention be paid to the following matters:
- Requesting the statement of charges in writing and identifying the collection dates one by one
- Recording the demand by way of a notarial notice or registered post with acknowledgement of receipt
- Correctly identifying, according to the value of the dispute, the threshold between the arbitration committee and the consumer court
- Clarifying the division of jurisdiction between the provincial and district arbitration committees before making the application
- Reducing the risk of dismissal by leaving necessary, reasonable and documented expenses outside the claim
- Putting a favourable arbitration committee decision into enforcement by relying on its character as a court judgment
Independent Legal provides services in the preparation of applications to arbitration committees and in the conduct of proceedings before the consumer courts in claims for the restitution of charges arising from consumer loans.