One of Africa's leading fintech startups, Flutterwave, is set to contact over 6,000 account holders across 35 banks to recover ₦19 billion ($24 million) following a High Court ruling on February 1.
This ruling is a sequel to claims by Flutterwave that POS merchants in 2023 had abused their access by conducting unauthorized transactions.
Despite a technical glitch leading to automatic transfers, Flutterwave ensured immediate communication with banks and fintechs. However, merchants, not entitled to the funds, retained them. This consequently led to suspending the accounts where funds were improperly transferred temporarily by Flutterwave.
Hence, the February order, a Mareva injunction, has empowered Flutterwave to reclaim funds illegally transferred by POS merchants in October 2023. This incident comes amid a surge in fraud attempts in Nigeria's financial services sector, prompting the Central Bank to mandate stricter KYC measures starting in March 2024.
The entire saga and recovery efforts emphasize the importance of Know Your Customer (KYC) procedures and challenges faced by neo-banks and traditional banks in Nigeria and across Africa.
