HabariPay, a fintech company under Guaranty Trust (GTCO), is currently taking legal steps to recover ₦1.1 billion ($1.1 million) that was mistakenly sent to several thousand customers in 2023. On Wednesday, a federal high court in Lagos approved an application that allows over 40 financial institutions to block accounts that received these erroneous payments.
The issue arose when HabariPay mistakenly credited some merchants twice during a transaction process. To resolve the situation, the fintech has started contacting these merchants, requesting that they return the extra money they received. Any other accounts that also benefited from the double credit will be required to refund the money as well, according to court documents seen by *TechCabal*. However, the documents do not explain exactly how the mistake occurred.
One insider with knowledge of the situation mentioned that hackers may have accessed HabariPay’s systems using a method called “race conditioning.” This technique allowed them to manipulate the system and trigger duplicate transactions. Another person connected to GTCO believes the mistake may have been due to human error.
Before turning to legal action, HabariPay had already begun recovering some of the funds by directly reaching out to the affected merchants. However, for those merchants who could not be contacted, the company went to court to obtain an order compelling them to return the funds. In Nigeria, financial institutions require legal authorization to reverse transactions, making court orders essential in situations like this.
The delay in initiating the legal process reflects the slow pace of Nigeria’s legal system, which poses a challenge for financial institutions needing to recover funds quickly. This case also highlights a broader issue in Nigeria’s financial sector, where fraud is becoming increasingly common. In the second quarter of 2024 alone, Nigerian financial institutions lost $25.7 million to fraud, representing a staggering 1,784.94% increase from the previous quarter.
This incident is part of a worrying trend, as financial fraud continues to rise, causing significant losses to businesses and financial institutions. HabariPay’s efforts to recover the mistakenly sent ₦1.1 billion are a reminder of the need for stronger security measures and more efficient legal processes to combat fraud and errors in the financial sector.
As of now, HabariPay continues its efforts to recover the remaining funds, and the legal case will determine how quickly and effectively the fintech can resolve the issue.
