Can Customers Trust Banks After Equity Loses Fraud Case
Read Time:2 Minute, 10 Second
Equity Bank Kenya has been ordered to compensate a customer Sh450,726 after the High Court rejected its appeal and confirmed a lower court ruling that found the bank negligent in responding to a reported fraud case.
Justice Julius Ng’arng’ar upheld the 2022 judgment, faulting the bank for a nine-month delay in launching an investigation after being notified of the incident.
The case arose from a 2019 incident in which Peterson Kagai was drugged and robbed. More than Sh600,000 was later withdrawn from his Equity Bank account through ATMs and a mobile banking platform Kagai had never activated. He reported the theft to both the police and Equity Bank within days.
Despite receiving early notice, the bank failed to initiate an internal investigation for nearly a year. Justice Ng’arng’ar, in his June 7, 2025 ruling, said the bank’s response “left a lot to be desired” and found it liable for breaching its duty of care to the customer.
The judgment held that the delay and the bank’s failure to block unauthorized transactions exposed the customer to preventable losses.
Read: How Banks in Kenya Are Losing Millions to Insider Fraud Schemes
During the trial, it was established that unauthorized ATM withdrawals and mobile banking transactions were processed despite Kagai not being registered for mobile banking. The court found this to be a clear lapse in security and customer verification procedures.
Legal analysts say the decision could influence how Kenyan courts handle similar cases involving delays in investigating reported fraud. Customers who promptly report theft from their accounts may now have stronger legal grounds to seek compensation if a bank fails to act within a reasonable timeframe.
Read: How Kenyans Are Having Their IDs Used in Tax Scams
The ruling also comes days after Equity Bank dismissed 1,200 employees across its branches following an internal forensic audit that uncovered widespread fraud involving staff salary accounts, customer transactions, and third-party businesses.
The bank’s investigations linked the employees to suspicious financial activity, including collusion in high-profile thefts involving billions of shillings. The dismissals follow an April 2025 probe that examined employee transactions dating back to December 2023.
According to sources familiar with the matter, the audit revealed unexplained money flows between employee salary accounts, M-Pesa wallets, and entities associated with customers.
Staff were required to account for deposits exceeding their salaries, and those who failed to do so faced disciplinary hearings and termination.
Jefferson Wachira is a writer at Africa Digest News, specializing in banking and finance trends, and their impact on African economies.
Happy
0 %
Sad
0 %
Excited
0 %
Sleepy
0 %
Angry
0 %
Surprise
0 %
0
0
Average Rating