Court Grants OPay Permission to Freeze Customer Accounts in ₦714M Recovery Effort After System Glitch

Lagos, Nigeria – In a significant legal development, the Federal High Court in Lagos has granted OPay, a Chinese-backed fintech company, the authority to freeze customer accounts in 30 listed banks. This action is part of an effort to recover ₦714 million lost due to a system glitch that allowed customers to complete card payments without being debited.

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The glitch, which occurred between December 10, 2023, and March 4, 2024, enabled customers to pay for items without the corresponding amount being deducted from their accounts. According to a report by TechCabal, this oversight has resulted in substantial financial losses for the fintech company.

In an attempt to recover the funds, OPay initially contacted customers who had received value for these unsuccessful transactions, particularly those with amounts exceeding ₦500,000. Despite reaching out via phone and email, only 10% of the contacted customers responded positively.

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“While some customers responded positively to the Applicant’s request and cooperated with the Applicant in respect of the recovery of the erroneously retained credits, some customers have refused, failed, and/or neglected to fund their accounts to enable the Applicant to deduct the value of the erroneously retained credits from their respective accounts,” OPay stated in a court filing.

Due to the lack of cooperation from many customers, OPay sought legal recourse, filing an affidavit of urgency along with its application to freeze the customer accounts. On June 28, 2024, the court granted OPay’s request, allowing the fintech to instruct thirty banks to restrict the affected accounts.

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Financial institutions use specific response codes to categorize transactions as successful, pending, or failed. For OPay, ‘RC 09’ indicates a pending transaction for which the customer is not debited. However, during the glitch period, the switching company Interswitch inadvertently settled all ‘RC 09’ transactions as successful, leading to the significant financial discrepancy.

“The Switching Company (Interswitch) that facilitated the said card transactions between the Applicant and its cardholders during this period inadvertently settled all the RC 09 transactions as successful,” OPay explained in its court filing.

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As OPay begins the process of freezing accounts to recover the lost funds, the company has declined to provide further comments on the situation.