Chargeback Fraud: Fidelity Bank Ordered To Deposit N811m With Court Registrar

Justice Chukwujekwu Aneke of the Federal High court, Lagos has ordered Fidelity Bank Plc 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.

The 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 filed against the bank and two others by the fintech firm.

Ruling in an ex parte application filed by Dr Oladapo Olanipekun (SAN) on behalf of the Plaintiff, Justice Aneke on July 17, 2024, 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 stated that after hearing Dr. O. Olanipekun (SAN) with C. Ike Esq, D. Henry-Ojo Esq and E. Omekeh Esq of Counsel for the Plaintiff applied to move in terms of the motion paper. And having carefully considered 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 (Fidelity Bank Plc), pending the hearing and determination of the motion on notice dated July 15, 2014″ AND “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 Fidelity Bank Plc 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 plaintiff alleges that Fidelity Bank Plc 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 N10,000,000,000.00 (ten billion Naira). The suit is marked FHC/L/CS/1268/2024. The defendants to the suit are Fidelity Bank Plc, Global Accelerex Ltd. and Interswitch Ltd.