HabariPay, the fintech arm of Guaranty Trust, has started legal proceedings to recover ₦1.1 billion ($1.1 million) that was mistakenly credited to several thousand account holders in 2023. The fintech company suffered the loss after inadvertently sending double payments to merchants.
On Wednesday, a federal high court in Lagos approved an application to freeze accounts across more than 40 financial institutions that received the erroneous payments. To have their accounts unfrozen, affected merchants will need to return the extra funds they received. Additionally, any account that benefited from the double credit transactions is required to refund the money, according to court documents.
While the exact cause of the mistake remains unclear, one insider indicated it might have been due to hackers exploiting a vulnerability known as “race conditioning,” which enabled simultaneous transactions on the fintech’s platform. However, others within GTCO have suggested that the issue resulted from human error.
HabariPay had initially tried to resolve the situation by directly reaching out to merchants to recover the funds. However, when some recipients could not be contacted, the company turned to the courts for a legal mandate. Under Nigerian law, financial institutions are required to obtain court orders before reversing transactions of this nature.
This recovery effort comes at a time of heightened concern in Nigeria’s financial sector, where financial institutions lost $25.7 million to fraud in the second quarter of 2024, representing a staggering 1,784.94% increase from the previous quarter.
HabariPay’s legal process underscores the challenges that Nigerian financial institutions face in recovering funds swiftly, particularly in light of the slow pace of legal proceedings.
