COURT: Customer faulted in bank-customer dispute 

Court clears bank, faults customer for fraudulent transactions on her account

Kampala, Uganda | URN | The High Court has absolved Barclays Bank Uganda (now Absa Bank) of liability for the loss of Shs 8.538 million withdrawn from a customer’s account without her authorisation, faulting the account holder for negligence.

The ruling followed an appeal filed by the bank against an earlier decision by a Grade One Magistrate, which had held the bank liable and ordered it to refund the money. But Justice Stephen Mubiru overturned that decision, finding that the customer, Eron Kabachwamba, acted negligently and exposed her card to fraud.

The judge determined that Kabachwamba failed in her duty to safeguard her Visa card and Personal Identification Number (PIN), as required under the terms of her banking agreement. He concluded that the trial magistrate had improperly evaluated the evidence and wrongly attributed liability to the bank.

Court records show that on January 19, 2013, Kabachwamba made deposits of 385,000 and 655,000 Shillings into her account. She was later alerted to a withdrawal of 8,538,356 shillings that had been made a day earlier, on January 18, in Nairobi, Kenya, though it had not yet been reflected on her account at the time.

Kabachwamba immediately reported the transaction to the bank, stating that she had not authorised it. Despite her complaint, the money was subsequently debited from her account on January 22, 2013.

Following internal investigations, the bank declined to refund the money. It concluded that Kabachwamba had compromised the security of her card during an earlier transaction at Emin Pasha Hotel in Kampala, which enabled fraudsters to access and later use her card details in Nairobi.

The bank further stated that the suspicious transactions in Nairobi had been flagged by its electronic monitoring system. However, attempts to reach Kabachwamba using the contact details she had provided were unsuccessful because her phone was switched off.

Investigations also revealed that on December 28, 2012, Kabachwamba had used her debit card at a point-of-sale machine at Emin Pasha Hotel. During the transaction, she handed over her card to a hotel attendant who claimed there was a technical issue with the machine and temporarily kept the card out of her sight.

Justice Mubiru, however, found it most likely that the card was cloned during this incident. He noted that Kabachwamba had retained physical possession of the original card throughout, ruling out theft and pointing instead to card skimming as the cause of the fraud.

The judge also found her explanation about the incident inconsistent and evasive, particularly regarding whether she had allowed unsupervised access to her card. This, he said, suggested that she was aware of her own negligence in handling the card.

He further held that the bank’s fraud detection system had functioned as expected by flagging the unusual transactions. The claim that the bank failed to provide a secure system was not supported by the evidence.

In the end, Justice Mubiru ruled that the trial court had reached the wrong conclusion. He set aside the earlier judgment, absolved the bank of liability, and ordered Kabachwamba to pay the costs of the case.

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