The High court has absolved Barclays Bank Uganda, now Absa Bank Uganda, of liability for the loss of Shs 8.5 million withdrawn from a customerās account without her authorisation, faulting the account holder for negligence.
The ruling followed an appeal filed by the bank against an earlier decision by a grade one magistrate, which had held it liable and ordered a refund. However, justice Stephen Mubiru overturned the decision, finding that the customer, Eron Kabachwamba, acted negligently and exposed her card to fraud.
The judge ruled that Kabachwamba failed in her duty to safeguard her Visa card and personal identification number (PIN), as required under the terms of her banking agreement.
He held that the trial magistrate improperly evaluated the evidence and wrongly attributed liability to the bank. Court records show that on January 19, 2013, Kabachwamba deposited Shs 385,000 and Shs 655,000 into her account.
She was later alerted to a withdrawal of Shs 8,538,356 that had been made a day earlier, on January 18, in Nairobi, Kenya, although it had not yet reflected on her account at the time.
Kabachwamba immediately reported the transaction to the bank, stating that she had not authorised it. Despite her complaint, the money was debited from her account on January 22, 2013.
Following internal investigations, the bank declined to refund the money, concluding that Kabachwamba had compromised the security of her card during an earlier transaction at Emin Pasha Hotel in Kampala, enabling fraudsters to access and later use her card details in Nairobi.
The bank also said the suspicious transactions in Nairobi had been flagged by its electronic monitoring system. However, attempts to reach Kabachwamba using the contact details on file were unsuccessful because her phone was switched off.
Investigations further showed that on December 28, 2012, Kabachwamba used her debit card at a point-of-sale machine at Emin Pasha Hotel. During the transaction, she handed her card to a hotel attendant who cited a technical problem and briefly kept it out of her sight.
Justice Mubiru found it most likely that the card was cloned during that incident. He noted that Kabachwamba retained physical possession of the original card throughout, ruling out theft and pointing to card skimming as the cause of the fraud.
The judge also found her explanation inconsistent and evasive, particularly regarding whether she allowed unsupervised access to her card, which he said suggested awareness of her own negligence.
He further held that the bankās fraud detection system functioned as expected by flagging the unusual transactions, and that claims the bank failed to provide a secure system were not supported by evidence. Justice Mubiru set aside the earlier judgment, absolved the bank of liability, and ordered Kabachwamba to pay the costs of the case.
