Court orders bank to pay N811m to court registrar over chargeback fraud
Justice Chukwujekwu Aneke of a Federal High Court sitting in Lagos has ordered a commercial bank to immediately pay N811,174,229.25 to the Chief Registrar of the court, which is the principal amount claimed by a fintech company, Shago Payments Limited against the bank.
Trial judge ordered that the said sum be held in trust in an interest-yielding account by the Chief Registrar of the court, in any of First Bank Nigeria Limited, Zenith Bank Plc., or Guaranty Trust Bank Limited, pending the hearing and determination of the suit against the bank and two others by the fintech firm.
Ruling on an ex parte application by Dr Oladapo Olanipekun, SAN, on behalf of the plaintiff, Justice Aneke ordered that the bank should within three days of receiving his orders, file an affidavit detailing its compliance with the order to pay the money to the Chief Registrar and must cause same to be served on the plaintiff’s counsel.
The court after hearing Dr. Olanipekun, SAN, for the plaintiff applied to move in terms of the motion paper.
The court said: “After considering the application and submissions of counsel, it is hereby ordered as follows: that an order of interim injunction is made restraining the 1st defendant, whether by itself, agents, representatives, directors, officers, servants, privies, proxies, assigns, or any other person, howsoever, described, acting directly or indirectly through it, from taking any step or action in furtherance of the alleged chargeback claims between June 2003 and August 2023, particularly by further combining or setting off the credit balances in the Plaintiff’s account numbers: 9110001128, 5620110431, 5620130679, 9110000891, and 5620130686, or otherwise by distraining any other account held by and or connected with the plaintiff in 1st defendant, pending the hearing and determination of the motion on notice dated July 15, 2024.
“An order of interim injunction is made restraining the 1st defendant whether by itself, agents, representatives, directors, officers, servants, privies, proxies, assigns, or any other person, howsoever, described, acting directly or indirectly through it, from (further) (mis)representing the plaintiff as a debtor in respect of/in connection with the debit to the plaintiff’s accounts arising from the chargeback claims between June 2023 and August 2023, whether by watch-listing the plaintiff on the Credit Risk Management System List of the Central Bank of Nigeria; the CR Services Credit Bureau Plc; CRC Credit Bureau Ltd; or by any other means whatsoever, pending the hearing and determination of the motion on notice dated July 15, 2024.”
The Judge subsequently adjourned to August 1, 2024 for mention.
The plaintiff, Shago Payments Ltd., is alleging that the bank caused unauthorised debits amounting to ¦ 940,321,051.58 from its account.
Of this amount, the plaintiff claims that ¦ 811,174,229.25 represents debits as a result of chargeback fraud.
The also plaintiff alleges that the bank was negligent and fraudulent in managing its account.
It also claims a breach of multiple duties and obligations, including (i) the Quincecare duty; (ii) an order referring the 1st defendant to the Central Bank of Nigeria and the Securities and Exchange Commission for investigation for unfair, unethical, unprofessional, fraudulent and unsound practices/business conduct; and (iii) an order directing the 1st defendant to pay damages to the plaintiff in the sum of N10 billion.
Other defendants in the suit are Global Accelerex Ltd., and Interswitch Ltd.
In its statement of claim, the plaintiff alleged that the bank processed fraudulent chargeback requests and debited the Payment Service Provider’s settlement account without authorisation, consent or approval.
These debits allegedly continued unabated even after the bank was cautioned on the fraudulent nature of the claims.
