The Commercial Division of the High Court has ruled that Equity Bank Uganda is not responsible for the loss of Shs34.4 million that was fraudulently withdrawn from a customer’s account through its mobile banking platform.
In a judgment delivered on November 21, Justice Patience Rubagumya overturned an earlier decision by a chief magistrate that had held the bank liable for the loss. The judge found that there was no evidence to show that Equity Bank acted negligently.
The case stemmed from a lawsuit filed by Augustine Bamwite Muhindo, an Equity Bank customer at the Church House branch. Muhindo reported that between December 22 and December 25, 2022, Shs34.4 million was withdrawn from his account using the bank’s Eazzy mobile banking service. He said he only noticed the suspicious transactions on January 2, 2023.
Muhindo argued that the withdrawals occurred after his mobile phone was stolen. He told court that the MTN line linked to his bank account had been blocked on December 17, 2022, after he reported the theft. On that basis, he accused the bank of negligence and breaching its duty to protect his account.
The lower court agreed with his argument and ordered Equity Bank to refund the money, pay damages and interest.
However, in allowing the bank’s appeal, the High Court shifted focus to the customer’s responsibility. Justice Rubagumya ruled that Muhindo failed to take reasonable steps to protect his account by not promptly informing the bank about the loss of his phone and SIM card before the fraudulent transactions happened.
The judge noted that without such notification, the bank was entitled to act on instructions coming through the registered mobile number.
“Since the respondent had not notified the bank about the loss of his phone and SIM card, the bank’s obligation was to follow what appeared to be valid customer instructions,” Justice Rubagumya said, adding that the customer’s own lack of due diligence could not be blamed on the bank.
Equity Bank, represented by lawyer Fahim Matovu, maintained that it was never informed about the stolen phone. The bank also told court that its systems showed the registered number was active and that transactions on the Eazzy platform require a personal identification number, making it unlikely that the withdrawals were due to system failure or negligence.
Justice Rubagumya concluded that the trial magistrate made errors in both law and fact when finding the bank liable. As a result, the High Court allowed the appeal and set aside all earlier orders against Equity Bank.
