Flutterwave Is Set To Recover $24 Million Lost To Illegal Transfers

Flutterwave is set to recover $24 million lost to illegal transfers. Nigerian-based Fintech startup Flutterwave following a High Court ruling on February 1 has been reportedly issued a Mareva injunction, or a freezing order, thus authorizing it to start the process of recovering $24 million lost through unauthorized transactions by point-of-sale merchants on its service and platform.

Flutterwave Is Set To Recover $24 Million

Flutterwave Is Set To Recover $24 Million

Flutterwave announced that on October 10, 2023, it uncovered misuse by several merchants using PoS devices, who exploited a “technical glitch” to carry out unauthorized transactions on its system.

Following the detection of these illegitimate transactions, the payment service, originating from Nigeria, immediately froze the accounts involved in the unauthorized movement of funds. The firm assures that customer funds have remained secure, and it is collaborating closely with appropriate authorities to thoroughly investigate and rectify the situation.

Legal filings reveal that the financial technology company obtained a prior court ruling, which enacted debit limitations on the implicated accounts two months subsequent to the discovery.

On February 1, 2024, a new court mandate required 35 financial entities, encompassing major banks like Access Bank, Zenith Bank, PolarisBank, and Providus Bank, as well as fintech operators such as Opay, Moniepoint, Paga, Palmpay, and VFD Bank, to disclose the email addresses and mobile phone numbers of certain account holders.

Content of the Court Order on the Recent Development

According to the court’s orders, Flutterwave is tasked with communicating with these account holders via email, SMS, and WhatsApp messages using the contact information obtained.

The effectiveness of this court-directed recovery effort hinges on the reliability of the customer data provided by the listed banks and financial institutions, highlighting the critical role of the Know Your Customer (KYC) standards.

Central Bank of Nigeria (CBN) Stricter Know Your Customer (KYC) Requirements

In December, the Central Bank of Nigeria (CBN) introduced stricter Know Your Customer (KYC) requirements, mandating that all banks, mobile money services, and financial institutions enforce the provision of a Bank Verification Number (BVN) and National Identity Number (NIN) for every account or wallet.

What Specialists Think About This KYC Protocols

However, specialists argue that the present KYC protocols are lacking, pointing out the absence of a requirement for customers to notify their banks about any alterations in their contact details, including addresses, emails, or phone numbers.

The Flutterwave incident unfolds amid a notable surge in fraudulent activities within Nigeria’s financial services sector.

What Legacy Banks Think Of This Development?

Legacy banks in Nigeria are attributing this increase to the lenient anti-fraud and customer verification measures implemented by neobanks. In response, some traditional banks are considering measures to prevent these digital financial institutions from accessing their services. For instance, Fidelity Bank imposed a two-week suspension on transfers to such digital entities in October 2023.



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