Class Action 22486-04-20: SWIFT fee vs Mizrahi Tefahot

Decision details

Date	September 7, 2023
Court	Tel Aviv-Jaffa District Court
Case	Class Action 22486-04-20 (Cyberlogic Ltd. v. Bank Leumi, Mizrahi Tefahot Bank and Discount Bank)
Type of decision	Certified as a class action, not yet decided on the merits
Amount	Not set / not published
Topic	Fees class action: SWIFT fee on foreign currency transfers of large businesses
Source	Source

The details on this page are based on the part of the decision open to the public on the Psakdin website and on two articles on ynet. We did not have the full text of the decision.

It is important to know from the outset: the decision certifies the conduct of the claim as a class action. It is not a decision on the merits, and as ynet noted, the claim has not yet been decided.

Background: Class Action 22486-04-20 Cyberlogic v. Mizrahi Tefahot, Leumi and Discount

On April 22, 2020 Cyberlogic Ltd., a high-tech company, filed a claim and a motion to certify it as a class action in the Tel Aviv-Jaffa District Court. The motion was filed against Bank Leumi, Mizrahi Tefahot Bank, Discount Bank and Bank Hapoalim. On March 15, 2021 the applicant withdrew the motion against Bank Hapoalim, and so the decision deals with the other three banks.

The motion concerned fees on two types of foreign currency transfers. The first is a self-transfer, from the customer's account at one bank to his account at another bank in Israel. The second is a transfer to another customer at another bank in Israel. According to ynet, the represented class is customers defined as a "large business", with a turnover of more than five million shekels, who made a foreign currency transfer defined as a supervised fee and were charged a SWIFT fee and a line fee.

The parties' arguments

According to the applicant, the banks charged on foreign currency transfers amounts exceeding the maximum amount in the fee schedule, and also charged the customer expenses such as SWIFT. It argued that the SWIFT fee was abolished by the Banking Supervision Department back in 2008, but the banks continued to charge it. According to the applicant, before the motion was filed it was told by the Supervisor of Banks that a banking corporation may not charge beyond the supervised fee, which stands at USD 10.

According to ynet, the applicant argued that if the SWIFT charges are an expense, they far exceed what the banks actually paid to the SWIFT cooperative. It put its personal damage from Mizrahi Tefahot at NIS 157, and the class's damage at more than NIS 2.5 million.

According to ynet, the banks argued that the fee rules and the fee schedule do not apply to "large businesses", and so the claims should be rejected. Regarding SWIFT, they argued that it is a legitimate fee for the actions required to send messages in the system.

What the court held on the SWIFT fee

According to ynet, Judge Doron Hasdai certified the claim as a class action on the cause of action of unjust enrichment, only with regard to the SWIFT charges. The claim of an additional charge beyond the fee schedule on foreign currency transfers was rejected. It was held that the banks did not prove that the SWIFT fee is charged for a service separate from the foreign currency transfer fee. According to the report, the affidavit of a Discount Bank representative showed that the SWIFT charges are collected as part of carrying out the transfer itself.

According to ynet, the questions to be examined later are whether the SWIFT charges are a fee or an expense. If it is a fee, it will be examined whether it was charged to large businesses for a separate and distinct service. If it is an expense, it will be examined whether the amount charged reflected the actual expense. ynet quoted from the decision: "It may be assumed that there is a significant group of large businesses that made foreign currency transfers and the respondents (the banks) charged them SWIFT fees".

What it means for Mizrahi Tefahot customers

The decision concerns large businesses that made foreign currency transfers through Mizrahi Tefahot and were charged a SWIFT fee alongside the transfer fee. At this stage it was only approved to conduct the claim on behalf of the class. It was not held that the bank must refund money.

More proceedings on fees on foreign currency transfers appear on the page Class Action 18101-09-20 correspondent bank fees and in the rulings database.

Sources

Status and caution

The full text is behind a paywall; the outcome according to ynet

More court rulings against Mizrahi Tefahot on foreign currency and transfers abroad

All 39 decisions in the database ›

Questions and answers

What was certified in the Cyberlogic class action against Mizrahi Tefahot?

The Tel Aviv-Jaffa District Court certified the conduct of a class action on the cause of action of unjust enrichment, on the claim that the banks charged large businesses SWIFT fees in addition to the foreign currency transfer fee. The claim has not yet been decided.

Who is included in the class in the SWIFT fee class action?

According to ynet, customers defined as a "large business" with a turnover of more than five million shekels, who made a foreign currency transfer defined as a supervised fee and were charged a SWIFT fee and a line fee.

Which claims were rejected in Class Action 22486-04-20?

According to ynet, the claim that the banks charged additional fees on foreign currency transfers beyond what is set in the fee schedule was rejected. The claim was certified only with regard to the SWIFT charges.

Against which banks was the SWIFT fee class action certified?

Against Bank Leumi, Mizrahi Tefahot Bank and Discount Bank. The applicant withdrew the motion against Bank Hapoalim in March 2021.

Did Mizrahi Tefahot Bank admit a violation?

No. At this stage the court only certified the claim as a class action. Whether the bank broke the law will be decided later in the proceeding.

Where can I read the full text?

The full text was not found openly online. You can search for it by case number in the Net HaMishpat database of the Israeli Judiciary.

Class Action 22486-04-20 Cyberlogic: class action certified against Mizrahi Tefahot over the SWIFT fee