Sometimes, when reading the news, one gets the feeling that everyone is drunk and that sober people have better things to do than speak up. Because there has been no sign of sober reasoning in the statements made by state representatives concerning the victims of so-called loan scams. Both a representative of the Ministry of Justice and Digital Affairs and the interior minister personally have been talking nonsense. From a lawyer's point of view, what is even worse is that the same nonsense can be found in a final ruling of the Tartu Circuit Court.

But what exactly are we talking about? Among other scams, schemes have become widespread in which criminals either obtain a person's PIN codes through deception and take out a loan in that person's name or persuade the person through elaborate stories to take out a loan themselves.

In both schemes, the loan money ultimately ends up in the hands of the criminals. If the criminals have the PIN codes, they can withdraw the money from the account themselves; if not, part of the scam scenario involves convincing the person that the loan money must now be withdrawn in cash and handed over somewhere or transferred to a foreign account or crypto platform.

In the eyes of the lender, the borrower is still the poor person who fell victim to fraud. As a result, many people who have fallen prey to scams have begun repaying loans they never actually intended to take out and that ended up in the hands of criminals.

At the end of January, Eesti Ekspress relayed the Ministry of Justice and Digital Affairs' cheerful message that such loan agreements, which a person has entered into because of a scammer's story, can be annulled. The article offered no sources other than quotes from the law (General Part of the Civil Code Act – ed.) and the optimism of a ministry representative.

The law clearly states that such a loan agreement cannot be annulled. It could be annulled if the loan agreement listed a third person as the recipient of the money — in the case of loan scams, the criminal themselves — but in practice this generally does not happen. It would be very nice if it did, because then there would be no need for criminal proceedings to catch the criminal. However, if there is no indication in the agreement that a third party connected to the fraud is involved, the agreement cannot be annulled. If a person themselves entered into the loan agreement because of the scammers' story, the validity of the agreement could only be challenged if that person had limited legal capacity.

If instead the case involved identity theft, in which criminals act using someone else's PIN codes so that the latter is not even aware a loan has been taken out, then it could indeed be argued that no loan agreement was concluded at all. In light of this legal fact, both the Ministry of Justice and Digital Affairs and the chair of the Tartu Circuit Court's civil chamber have offered encouragement to victims.

What the optimists do not mention is unjust enrichment — in other words, the fact that what is received on the basis of a void or annulled agreement generally still has to be returned. If money from a loan agreement arranged by criminals ends up in your account, it is entirely possible that you will have to repay at least the principal of that loan even if the agreement is void or annulled.

The Tartu Circuit Court has indeed managed to get past this obstacle as well, finding that if the money moved from the person's account to the criminals, then the person was not actually enriched, since they no longer have the money. There is only one small problem: legally, this approach does not hold. As a rule, the lender does not bear the risk for what happens to the loan money after it has been transferred to the borrower's account.

In one case, the Tartu Circuit Court went even further. In the summer of 2025, the court issued a ruling finding that Bigbank did not have the right to demand repayment of loan money from a person who had fallen victim to scammers and had applied for loans from several banks.

Bigbank had even implemented an additional security measure — a video call — to verify that the loan applicant really was the person they claimed to be. The person participated in the video call and concluded the loan agreement. The court noted that the fraud victim had, among other things, used the money received from Bigbank to repay other loans that the scammers had taken out in their name and found that this "cannot be held against the defendant."

This is very sweet, except that legally it clearly constitutes unjust enrichment if the fraud victim used the money received from Bigbank to fulfill other loan obligations. A reduction in payment obligations to other banks is undoubtedly enrichment. Even if the fraud victim had not used the Bigbank loan to repay other loans, that might not have saved them. The Tartu Circuit Court, however, was not prevented by the relevant provisions or earlier case law from concluding that the fraud victim had not been enriched at all.

This particular ruling is curious in general, since the circuit court's reasoning does not contain a single reference to substantive law and I am not exaggerating — the only provisions cited by the court are procedural ones.

In short, in court a person who has fallen victim to such a scam may indeed get lucky if the court fails to apply the applicable law correctly.

As the cherry on top, Interior Minister Igor Taro also encouraged people, via Eesti Ekspress, to hope for relief from their debts through court proceedings. Taro cheerfully claimed that going to court is not particularly expensive in Estonia and that turning to the administrative court is so cheap that there are even serial complainants. The minister also suggested that there is no need for "the most expensive lawyer in the world" in order to go to court.

This raises the question of whether the interior minister even understands what he is talking about. To begin with, the administrative court has nothing to do with the matter — this is an issue for the civil courts. Second, even a not-the-most-expensive lawyer in the world is expensive for an ordinary person. Yes, people serving long prison sentences may indeed have the time to become serial complainants against the state through the administrative courts, but disputing a case with a bank in civil court is an entirely different matter. You need a legal expert. Or should a fraud victim who took out several loans as part of a so-called "special operation" begin personally arguing the nullity and annulment of transactions and generating objections to unjust enrichment claims and other such fun?

For someone earning a minister's salary, a thousand, couple thousand or more euros that may already be spent in the first court instance might indeed not be a large sum. But what if the court ultimately finds, applying the applicable law correctly, that the borrower must still repay the principal to the lender and also cover the lender's legal costs? Would the outlook still be so optimistic then?

From a human perspective, it is nice that the Tartu Circuit Court wanted so badly to help the fraud victim that it did not even try to twist the legal provisions but simply set them aside. At the same time, however, this affects the broader law of obligations. It removes any responsibility from the person who fell victim to the scam and places it entirely on the other party to the transaction. If that other party is a bank, it may be difficult to sympathize with, but the other party could be anyone in the context of any contract.

Moreover, if even Bigbank's additional measure of verifying identity via a video call is not sufficient, then it means that signing a loan agreement even at a bank branch carries the risk that the person may in fact be acting under the influence of criminals. In that case, lenders would be wise to start turning off the tap because you never know when the entire loan amount might simply have to be written off.

--

Follow ERR News on Facebook and X and never miss an update!