A bank account is maintained on the basis that the bank will keep an accurate record of the customer’s funds and will only debit the account in accordance with the customer’s instructions, the terms governing the account, or a lawful authority. Where a bank wrongfully deducts money from a customer’s account, the customer is entitled to challenge the deduction and seek recovery of the money. A wrongful deduction can arise from an unauthorised transaction, an erroneous debit, excessive or unauthorised bank charges, a duplicate debit, a failed transaction that was nevertheless debited, or an error in the bank’s calculation of the customer’s indebtedness. The Central Bank of Nigeria’s Consumer Protection Framework expressly recognises unauthorised or erroneous debits, excess charges and financial loss resulting from staff negligence or fraudulent activities as categories of complaints that banks’ customer-compensation policies should address. This article explains what to do when a bank wrongfully deducts money from your account and the legal remedies available for recovering the money. What Is a Wrongful Bank Deduction? A wrongful bank deduction occurs where a bank debits a customer’s account without a valid basis. Examples include: A debit that the customer did not authorise. A bank charge that was not permitted. A duplicate debit for the same transaction. A failed ATM transaction where the account was debited but cash was not dispensed. A POS or electronic transaction that was reversed by the merchant but not credited back to the customer. A bank debiting the wrong amount. A bank deducting money based on an erroneous calculation. An unauthorised transfer from the customer’s account. Excessive or unlawful charges. A debit made after the customer has already settled the relevant obligation. The precise legal position depends on the circumstances of the deduction. Can a Bank Debit Your Account Without Your Permission? A bank cannot simply debit a customer’s account whenever it wishes. There are, however, circumstances in which a bank can debit an account without obtaining a fresh instruction from the customer. These include legitimate charges authorised by the applicable terms and conditions, statutory deductions, repayment of obligations where the bank has a valid contractual right of set-off, and other deductions authorised by law or the account agreement. The important question is therefore not merely whether the customer gave a specific instruction immediately before the debit. The question is whether the bank had a lawful or contractual basis for making the debit. Where there is no such basis, the customer can challenge the debit. What Are Common Examples of Wrongful Bank Deductions? Unauthorised Electronic Transfer Money can be transferred from an account through internet banking, mobile banking, USSD or another electronic channel without the customer’s authority. Where the customer did not authorise the transaction, the customer should immediately notify the bank and request investigation and reversal. Failed ATM Transaction An ATM transaction can fail while the customer’s account is nevertheless debited. For example, a customer attempts to withdraw ₦100,000, the ATM does not dispense the money, but the account statement shows a ₦100,000 debit. The customer should report the transaction immediately and request reversal. Wrongful Bank Charges A bank can also wrongfully deduct money by imposing charges that are not authorised or exceed the applicable limits. The CBN’s Guide to Charges sets out charges applicable to banking services and provides sanctions where a financial institution wrongfully imposes a particular charge on a customer. Duplicate Debit A customer can sometimes be charged twice for one transaction. Where only one transaction occurred but two debits appear on the account, the customer should notify the bank and request correction of the account. Erroneous Debit A bank can make an accounting or calculation error and debit the customer’s account with an amount that is not actually owed. Nigerian appellate decisions recognise that a bank’s wrongful debit can constitute a breach of the bank’s obligations to its customer. In Union Bank of Nigeria Plc v. E.D. Emole, the court considered a situation where the bank wrongly debited the customer’s account as a result of an error and treated the wrongful debit as a breach of the bank’s duty to maintain a proper and accurate account. What Should You Do When a Bank Wrongfully Deducts Money? The customer should act promptly. 1. Obtain Your Bank Statement First obtain a statement or transaction history showing the disputed debit. Identify: The date of the debit. The amount. The transaction description. The transaction reference. The account into which the money was transferred, where available. Any applicable bank charges. Do not simply tell the bank that “money was removed.” Identify the specific transaction. This is important because a customer bringing a legal claim must be able to identify and prove the particular debit being challenged. In Alhaji Aminu Hamisu Usman v. First Bank of Nigeria Plc, the Court of Appeal criticised a party who merely tendered a statement of account containing numerous alleged unauthorised charges without identifying the specific entries and explaining why they were unauthorised. 2. Report the Debit to the Bank Immediately Contact the bank through its official complaint channels. Where the transaction is unauthorised, report it as soon as possible. The complaint should identify the disputed transaction and clearly state that you did not authorise it, where that is the case. 3. Make the Complaint in Writing Do not rely solely on a telephone conversation. Submit a written complaint through the bank’s official complaint channel and retain evidence that it was submitted. The CBN advises customers to submit written complaints to their banks and obtain an acknowledgement for their records. 4. Request Reversal Clearly state what you want the bank to do. For example: I request the immediate reversal and re-crediting of the sum of ₦500,000 wrongfully debited from my account on 20 August 2026. Where appropriate, request that the bank provide the result of its investigation in writing. 5. Preserve the Evidence Keep: Bank statements. SMS alerts. Email alerts. Transaction receipts. ATM slips. POS receipts. Screenshots. Complaint reference numbers. Emails to the bank. The bank’s responses. Relevant
Can a Bank Freeze a Joint Account in Nigeria?
A joint bank account is an account operated in the names of two or more persons. Joint accounts are commonly used by spouses, business partners, family members and other persons who wish to operate an account together. A common question is whether a bank can freeze a joint account because of a problem involving only one of the account holders. Yes, a bank can place a restriction on a joint account in appropriate circumstances. However, the fact that one joint account holder has a dispute, debt or legal problem does not automatically give the bank an unrestricted right to freeze the entire account. The legality of the restriction depends on the reason for the freeze, the account mandate, the bank’s contractual terms, any applicable regulatory or statutory authority and, where relevant, the existence and scope of a court order. Nigerian case law also establishes that a bank owes its customers contractual duties and must exercise reasonable care and skill in operating their accounts. In Bernard & Anor v. FCMB Ltd (2022) LCN/16024(CA), the Court of Appeal considered a restriction placed on a business savings joint account and affirmed that an unjustified restriction can constitute a breach of the banker-customer relationship. What Is a Joint Bank Account? A joint account is an account opened in the names of two or more persons. The manner in which the account can be operated is determined by the account mandate. For example, a joint account can be structured so that: either account holder can give instructions independently; all account holders must sign before a transaction can be carried out; or a specified number of the account holders must authorise a transaction. The Central Bank of Nigeria’s account-opening framework recognises joint accounts and provides for an account mandate specifying the authority by which the account is to be operated. The particular mandate governing the account is therefore important when determining the rights of the joint account holders. Can a Bank Freeze a Joint Account? Yes. A bank can restrict a joint account where there is a lawful basis for doing so. For example, a restriction can arise where: there is a valid court order; the bank is required to comply with a lawful regulatory or statutory requirement; there is a legitimate dispute concerning the ownership or operation of the funds; the account is connected with a suspected fraudulent transaction; the bank is acting pursuant to a valid contractual right; or circumstances surrounding the account require the bank to suspend transactions pending clarification. The bank’s terms and conditions can also be relevant. For example, Zenith Bank’s published account-opening terms provide for the bank to place a hold on an account where there is a dispute concerning funds or another person claims an interest in the funds. However, the existence of a joint account does not give the bank an unlimited power to freeze it whenever one of the account holders has a personal problem. Can a Bank Freeze the Entire Joint Account Because of One Account Holder? It depends on the circumstances. This is the more important question. Where the reason for the restriction relates specifically to one account holder, the bank should have a proper basis for determining the extent of the restriction. For example, suppose A and B maintain a joint account containing ₦10 million. A becomes the subject of a legal dispute concerning ₦2 million belonging to A personally. The fact that A is a joint account holder does not automatically establish that all ₦10 million in the joint account belongs to A or that the entire account should be permanently frozen. The bank must consider the nature of the claim, the account mandate, the source and ownership of the funds where relevant, and the terms of any court order or other legal authority relied upon. What If One Joint Account Holder Owes Money to a Creditor? A personal debt owed by one joint account holder does not automatically mean that the creditor is entitled to all the money in the joint account. Where the creditor has obtained a judgment against one account holder, the appropriate judgment-enforcement procedure must be followed. A creditor cannot simply instruct a bank to take the money of the other joint account holder merely because the debtor happens to be a joint account holder. Where a court order is involved, the precise terms and scope of that order become critical. The non-debtor joint account holder should therefore obtain legal advice immediately if a joint account has been restricted because of the other holder’s personal debt. Can a Bank Freeze a Joint Account Because of a Court Order? Yes. Where a valid court order directs a bank to restrict or preserve funds in a joint account, the bank is required to comply with the order within its terms. However, the court order should be examined carefully. The important questions include: Which account is affected? Which account holder is the subject of the proceedings? What amount is affected? Does the order apply to the entire account? Does it restrict withdrawals or completely freeze the account? How long is the order intended to operate? Was the order made by a court with jurisdiction? A bank should not treat an order concerning one person as automatically authorising restrictions beyond the terms of the order. Can the Police Cause a Joint Account to Be Frozen? A police investigation can result in a bank account being restricted, but the bank’s legal authority to impose the restriction must still be considered. This issue arose in Bernard & Anor v. FCMB Ltd. The appellants operated a business savings joint account with FCMB. They complained that the account had been frozen following a Nigerian Police Force instruction. FCMB maintained that it had acted pursuant to a Post No Debit order from a Magistrate Court. The Court of Appeal ultimately dealt with the question of damages and affirmed the lower court’s refusal to award punitive or exemplary damages. Importantly, however, the judgment discussed the contractual banker-customer relationship