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HomeBUSINESSATM Fraud: court orders First bank to pay N13million compensation to customer

ATM Fraud: court orders First bank to pay N13million compensation to customer

     At last judgement has come the way of an aggrieved customer of First Bank Nigeria Plc who had suffered fraudulent activity on his account with the bank running into over N800,000. The customer, named Bode Abolade, resides in Nigeria, but alleged that a fraud was perpetrated as his account was debited for shopping in London and flight tickets bought in far away Budapest in Hungary.

   After a titanic legal battle that started sometime in 2013, the presiding Judge Hadizat Shagari in her judgement this year declared the claim of the plaintiff succeeds and awarded N13million against First bank Plc in favour of the plaintiff.

   Abolade, who is seeking redress against the bank, joined MasterCard West Africa Limited as co –defendant in the litigation. In an amended statement of claim filed before a Lagos Federal high court, on his behalf by a Lagos-based lawyer, Barrister Ganiyu Bello, the customer averred that he maintains a current account with First Bank of Nigeria which he has been operating since 2006 directly by cheques and with the MasterCard procured from the bank after due payment which he uses electronically through Automated Teller Machines (ATMs).

With the card bearing the MasterCard Trade Mark and produced by MasterCard West Africa Limited, it’s advertised to be internationally acceptable and acknowledged and therefore projected to have high technological protection, hence the plaintiff’s confidence in using the MasterCard.

However, Mr Abolade alleged that on 17th August, 2012 he discovered that his account with First Bank was fraudulently debited with sum of N750,509.77 arising from unknown and unauthorized transactions. He promptly complained via voice call and as well by e-mail, with his complaint acknowledged. Thereafter, he physically visited the head office of the bank at Marina, Lagos State on several occasions and he was told that the matter was under investigation.

In its letter dated 5th September, 2012, First Bank denied liability, forcing to write the Central Bank of Nigeria on the issue. In its response on September 27, 2012, the CBN directed First bank to review his complaint and respond within 72hours. While awaiting First Bank’s response, the plaintiff made a formal complaint to MasterCard West Africa on September 10, 2012, with MasterCard advising him to apply for the payment of provisional credit to his account within 60days in its response. In accordance with the advice, he requested for provisional credit to be placed on his account to the bank on September 11, 2012 but the bank did not respond to the request.

Pursuant to CBN’s directives, First Bank made available details of the unauthorized transactions on his account, a copy of which was sent to him as follows: (a) Online transaction receipt for 3 internet purchases of auto parts made by Mr Manuel Caser of 22 Greengate street London and third from Digital and (b) Two Air Tickets purchased on Wizz Air in Budapest showing Passengers’ names Gamote Iordam and Alina Claudia Duma respectively.

Despite Abolade making it clear he does not know any of these persons, neither did he authorize the transactions, the bank neglected to demand from the merchants Turner Shop and Wizz Air or their banks the sum of N750,509.77 arising from the unlawful transactions on his account within 60days of occurrence as per the charge process and as advised by MasterCard.      He also declared that there was never a time the details of his MasterCard, which is always in his possession, disclosed to anyone, and in the circumstances of this matter, First bank is liable for the online fraud committed on his account because it arose from card skimming and/or counterfeiting.

     He contended further that the online fraud committed on his account was not due to his negligence but by means of other compromises of the defendants’ security because the information required for online transactions are open and accessible only to the staff of First bank who handed over the MasterCard to him at the inception as well as the staff of MasterCard who had the custody of the card before issuance. He stated further that the loss of his N750,509.77 from his account has put him under serious financial strains and stress so much so that he could not carry out important projects already lined up for execution. Mr Abolade added that his account, which has been debit frozen since August 2012 to avoid further complications, has constrained him access to his funds in the account and therefore cannot transact any other businesses in the cashless environment of Lagos state. The bank, in spite of several demands, has failed to reimburse him and in consequence, he is claiming from the defendants jointly and severally for the reimbursement of N750,509.77 and N10million damages respectively plus interest at the rate of 21% per annum with effect from August 17, 2012 until entire sum is fully paid.

However, in its amended statement of defence filed by Novolex Solicitors, First Bank, while describing the plaintiff‘s suit as speculative, vexatious and an abuse of judicial process, urged the court to dismiss same with substantial cost on the ground that the reported transactions in this instance showed that the plaintiff’s card was used to order auto parts in United Kingdom and to pay for airline tickets. These transactions could not have been possible without at least the initiator or enabler knowing the number and other details, thus buttressing the fact that the plaintiff must have compromised his security information.

First Bank also stated that as a precautionary measure to prevent further dissipation of the funds therein and to enable the bank carry out full investigation into the complainant’s withdrawals, another account was opened for the plaintiff to enable him to continue his normal banking transactions.

       Justice Shagari said “On critical examination of the facts and circumstance of this case First Bank has not done due diligence to the complaint of the plaintiff in providing the plaintiff and this court with details investigation of the online fraud carried out on the plaintiff account. 

        On the whole the plaintiff has proved his case on preponderance of evidence while the burden of proof has now shifted to First Bank, as the bank did not provide sufficient investigation report to the online fraudulent transaction on the plaintiff account they relied on card holder clause and shifted the liability on the plaintiff, but strict to sense First Bank is liable to the Plaintiff’s claim I so hold. 

      Consequently the claim of the Plaintiff succeeds and relief sought are granted on the second claim of N10million as compensation, it also awarded a compensation of N3million against First Bank as contained in the relief. The plaintiff’s claim succeeds. 


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