Liability of a Bank for Unauthorized Access to a Customer’s ATM Card

CASE TITLE: NWACHUKWU v. U.B.A (2023) LPELR-60847 (CA)

JUDGMENT DATE: 21ST JUNE, 2023

JUSTICES: OBIETONBARA OWUPELE DANIEL-KALIO, JCA
PATRICIA AJUMA MAHMOUD, JCA
BATURE ISAH GAFAI, JCA

DIVISION: AKWA

PRACTICE AREA: BANKING LAW

FACTS:
This appeal emanated from the judgment delivered on June 23, 2016, by the Anambra State High Court in Awka, presided over by Hon. Justice C. A. Emembolu. The appellant, who was the plaintiff in the trial, filed a writ of summons on May 13, 2010, seeking restitution of N350,500 withdrawn from his savings account with the defendant, along with charges unlawfully debited and other reliefs. The appellant claimed that unauthorized ATM withdrawals had occurred on October 19, 2009, which he denied making.

The appellant argued that he maintained a savings account with the defendant’s Anambra State Secretariat branch, and after an over-the-counter withdrawal of N50,000 on November 11, 2009, he discovered discrepancies in his account balance. The respondent contended that it issued an ATM card to the appellant, along with a Personal Identification Number (PIN), and the appellant accepted the terms and conditions, relieving the respondent of liability for unauthorized access. The respondent claimed that the appellant, upon receiving the ATM card and PIN, bore responsibility for any resulting fraud.

During the trial, the appellant presented his case, testifying on his behalf and submitting six exhibits (A, B1, B2, C, D, and E). The respondent called one witness and tendered one document marked as Exhibit F.

The trial Court, after hearing both sides, dismissed the appellant’s case. The appellant has appealed this judgment.

ISSUE(S) FOR DETERMINATION:

The appeal was determined on:

“Whether the learned trial judge was right when he dismissed the Appellant’s claim for lacking in merit.”

COUNSEL SUBMISSION(S):
The Appellant’s counsel argued on three key issues. First, it was contended that the Appellant provided credible and unchallenged evidence, relying on cases that assert the acceptance of unchallenged evidence as proof. Second, they accused the Trial Court of failing to make findings on vital issues, leading to a miscarriage of justice for the Appellant. Third, they argued that the case differed from cited precedents, emphasizing that the unauthorized withdrawals were made without the Appellant’s ATM card and challenging the trial Court’s reliance on certain cases.

In response, the Respondent’s counsel countered each of these points. Regarding the first issue, it was asserted that the Appellant, having received an ATM card from the Respondent, was bound by the law and usage applicable to ATM cards. They referred to a case to support the notion that the Appellant subscribed to the use of ATM cards and should be subject to relevant rules. On the second issue, the Respondent’s counsel argued that the trial Court appropriately evaluated the evidence, particularly Exhibit C, and concluded that the Appellant’s case lacked merit. Lastly, on the third issue, they maintained that the withdrawals were made through the Appellant’s ATM card, activating the strict liability rule, and dismissed the Appellant’s claim.

DECISION/HELD:
The appeal was dismissed.

RATIO:
BANKING LAW – BANKER-CUSTOMER RELATIONSHIP: When a customer will be held to have failed to prove the liability of a bank for unauthorized ATM withdrawals/internet fraud on his account

“This case, especially some of the exhibits tendered by the Appellant brings to the fore some of the diverse methods used by fraudsters to dupe people of their hard-earned money. Social media, too, is full of instances and ingenious ways employed by fraudsters to clone people’s ATM cards, get their PINs, or, in some other manner, unlawfully access their accounts and withdraw the money without the knowledge of the bank. It will run all the banks out of business to expect that they bear the burden of every such fraud. It would be a different ball game if those withdrawals were made at different branches and the Appellant upon receiving the alert of the first withdrawal, immediately contacted the Respondent to inform them. If the Respondent failed to block the account and allowed further withdrawals to be made, then there may be a basis to hold them liable. Or if an employee of the Respondent is found to have connived with the perpetrator in unlawfully withdrawing the money, the Respondent can be held vicariously liable. In the absence of proven failure of duty of care on the part of the Respondent or fraud by its staff or employee, the Respondent cannot be held liable for what may well be an internet fraud on the Appellant’s account.

Every person has a responsibility to ensure they don’t respond to any inquiries over the phone that require them to give details of their ATM cards or other internet banking methods. Banks cannot monitor every account held with them against fraud. Individuals have a huge responsibility to guide and protect their deposits from electronic theft.

On the whole, I find that the Appellant failed to prove the Respondent’s liability to him in respect of the alleged withdrawal of N350,500 purportedly through this ATM. The Lower Court was therefore on terra firm in holding that the Appellant failed to prove his case with evidence before the Court. Consequently, I find this appeal without merit. It fails. It is accordingly dismissed. Ordinarily, I would not award costs in favour of a bank or any other giant financial institution such as the Respondent. However, in view of the upsurge of fraud in internet banking there is the need to deter frivolous appeals like this one. As a result, I award costs of N100,000 against the Appellant and in favour of the Respondent.” Per Mahmoud, J.C.A.

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