The High Court in Kampala has ruled that Stanbic Bank Uganda did not show that the online payment system had sufficient security features to safeguard against incorrect payments in accordance with its contractual obligations.
The case stems from an incident in which Abacus Parenteral Drugs Limited dragged the bank to court over Shs 2.2 billion.
According to the petitioner, in a bid to ease its daily financial reconciliations and for salary payments for its staff at its Mukono factory, Stanbic Bank on May 12, 2010, applied and obtained from them online banking bankingservices in respect of the account.
However, between November 2015 and March 2018, the plaintiff realized that Stanbic Bank had honored a number of payments over their account, and resultantly a total sum of Shs 2,203,503,381 was debited without the plaintiff’s knowledge and/or authorization.
“The bank had a duty to put in place robust fraud detection and prevention solutions to protect their system and the customer. At the bare minimum, the online banking system should have flagged the repeated use of the same account numbers in the names of different beneficiaries,” the court ruled.
Stanbic Bank did not refute the evidence adduced under the plaintiff’s bank statement.
For instance, two accounts belonging to one Hope Kabajjungu were paid Shs 1,697,783,222 under wrong descriptions and account names that did not belong to the purported beneficiary. Kabajjungu, who was the recipient of the erroneous payments, is a customer of Stanbic Bank.
According to Court, the bank had the internal capacity to verify that her account name was falsified repeatedly in the names of different service providers.
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