MTN Telecomm sues 18 Nigerian banks over N22B fraud

According to reports, MTN Telecommunications sued 18 Nigerian banks over a mobile money fraud that cost them $22.3 billion ($53.7 million).

MTN claims that its newly registered mobile money Payment Service Bank, MoMo, has experienced a financial loss from banks it partners with in a lawsuit. MTN asserts that the funds were unintentionally moved to 8,000 accounts held by clients of the 18 institutions.

Anthony Usoro Usoro, the chief executive officer of MoMo PSB, asserted in the lawsuit that the fraud involved 700,000 transactions in all over the course of one month. MoMo PSB apparently shut down its service on May 24 after becoming aware of the fraud to limit future exposure.

Nigerians have been responding to the legal dispute involving MoMo PSB. Despite claims that MoMo had taken the banks to court to recover N22.3 billion that had been "erroneously transferred to 8,000 bank customers," many accuse the banks of being stingy with refunds.

The PSB requested that the court rule that the funds totaling N22.3 billion belong to Momo PSB and not the banks' account holders in a lawsuit with the case number FHC/L/CS/960/2022 filed on May 30, 2022.

“By virtue of the provisions of the CBN Regulation on Instant (Inter-Bank) Electronic Funds Transfer Services, made pursuant to sections 2(D), 33(1)6) And 47(2) of the CBN Act 2007 the plaintiff is entitled to a return of its money and the provision of the information which it requires from the defendants,” the filing read.

Access Bank, Ecobank, Fidelity Bank, First Bank, First City Monument Bank, Guaranty Trust Bank, Heritage Bank, Polaris Bank, and Providus Bank are the affected banks that are named as defendants in the lawsuit. Suntrust Bank, Standard Chartered, Stanbic IBTC, Sterling Bank, SunTrust Bank, Union Bank, United Bank for Africa, Unity Bank, Wema Bank, and Zenith Bank. and others are also included.

MoMo PSB is requesting the following in the lawsuit brought by Lotanna Okoli, a top Nigerian attorney, on behalf of the business:

·        A declaration that the deposits totaling N22,300,000,000.00 that the plaintiff mistakenly deposited to the accounts of the defendant banks' customers belong to the plaintiff and not the defendant banks' customers, according to the court document. 

·       An order requiring each of the defendant banks to account for the funds that are still in their clients' accounts as well as the funds that have been taken by the clients and are no longer there.

·        An order ordering the defendants' banks to promptly transfer the total amount of N22,300,000,000.00 to the plaintiffs' settlement account in the name MOMO PSB settlement account number: 2041379385 at First Bank Plc Samuel Asabia House 35 Marina, Lagos, where the funds were originally received, less the amount of funds that are no longer accessible.

·        A court order requiring the defendant banks to provide any and all information, including account name details, regarding the accounts from which the plaintiff's funds have been transferred to third parties, including the destination accounts and the banks in which they are held, in order to help trace and recover those funds.

Two months have passed since MTN received permission from the Central Bank of Nigeria to operate a payment service bank.

Bank customers who had trouble collecting refunds for unsuccessful transactions responded to the article on Twitter by saying it might be very difficult to reverse cash from Nigerian banks. Some claim that the banks are attempting to stifle the innovations introduced by PSBs and fintechs.

However, since the funds were allegedly moved to customers' accounts, many of whom may have spent the funds, it is possible that the banks are not to blame in this case.