A mistaken mobile money or bank transfer can be a frustrating experience. A customer may realise the error within minutes, report it to the bank and request a reversal, only to discover that the money has already been withdrawn or transferred elsewhere. What responsibility does a bank have once it receives such a complaint?
The High Court addressed this question in Kenya Commercial Bank Limited v Kiburi (Civil Appeal E176 of 2023) [2026] KEHC 10341 (KLR), a decision delivered on 9 July 2026. The judgment provides useful guidance on the duty of care owed by banks following reports of erroneous payments, the handling of customer information and the legal remedies available to persons who lose money through mistaken transactions.
What happened in the case?
The dispute arose after SMK transferred KSh 2,050 to an unintended recipient after entering an incorrect Paybill number on 12 February 2023. Upon discovering the mistake, he promptly notified Kenya Commercial Bank Limited (KCB) and requested a reversal. The bank acknowledged his complaint but did not provide sufficient evidence that it had taken timely steps to preserve the funds.
According to the evidence before the court, the money was subsequently transferred to another mobile number through internet banking and withdrawn before the recipient’s account was locked. The bank also declined to disclose the recipient’s details, relying on customer confidentiality.
Kiburi subsequently filed a claim before the Small Claims Court at Nakuru. The court found in his favour and awarded him KSh 2,050, together with costs and interest. KCB appealed, arguing, among other things, that the customer had caused his own loss by entering the wrong Paybill number and that the bank could not reverse the transaction without the recipient’s consent.
In its judgment of 9 July 2026, the High Court dismissed the appeal in its entirety and awarded costs to Kiburi.
A bank’s duty does not end with acknowledging a complaint
One of the key lessons from the decision is that receiving and acknowledging a complaint is not necessarily sufficient. Once a bank has been notified that funds were transferred in error, it must take reasonable and timely steps within its control to prevent the funds from being dissipated while the reversal process is pursued.
The Court upheld the finding that KCB had failed to demonstrate what action it took after receiving Kiburi’s complaint. Although the bank explained that its internal procedures required the complaint to be escalated to the relevant branch, the resulting delay allowed the funds to leave the recipient’s account before it was locked.
The Court emphasised that the bank’s responsibility was not necessarily to reverse the transaction unilaterally. Rather, it was to exercise reasonable diligence to preserve the funds while seeking the necessary consent and pursuing the reversal process.
This distinction is important. A bank may be unable to debit a recipient’s account without proper authority, but that limitation does not automatically absolve it of responsibility for failing to take other reasonable steps available to it.
Does entering the wrong payment details absolve the bank of liability?
KCB argued that Kiburi’s own negligence was the immediate cause of the loss because he failed to confirm the correct Paybill number before completing the transaction.
The Court rejected this argument in the circumstances of the case. Although the original payment was made in error, Kiburi reported the mistake within minutes. The Court considered the bank’s conduct after receiving the complaint and found that its failure to take adequate steps contributed to the loss.
The decision therefore highlights the importance of distinguishing between the mistake that initiates a loss and the conduct that follows once the mistake has been reported.
It does not mean that customers can disregard reasonable precautions when making electronic payments, or that a bank will automatically be liable whenever a customer sends money to the wrong recipient. Liability will depend on the circumstances, the evidence available, the bank’s response and whether its conduct contributed to the loss.
Can a bank rely on customer confidentiality to withhold the recipient’s details?
Banks have obligations to protect their customers’ confidential information. However, the Court found that the bank’s refusal to disclose the unintended recipient’s details, coupled with its failure to take adequate recovery measures, hindered Kiburi’s efforts to recover the money.
The Court noted that the recipient’s details were relevant to Kiburi’s efforts to pursue recovery. It further observed that if the bank was unwilling to disclose the information, it should have taken the necessary steps within its own systems to preserve or recover the funds.
The practical lesson is not that banks may freely disclose confidential customer information whenever a complaint is made. Rather, confidentiality should be addressed alongside the bank’s obligation to respond reasonably to an erroneous transaction. Depending on the circumstances, appropriate steps may include promptly escalating the complaint, contacting the receiving branch or institution, seeking the recipient’s consent, and taking lawful measures to prevent further dissipation of the funds.
The relationship with earlier decisions
The judgment also considered Kingdom Bank Limited v Alice Wanja Wanjohi [2024] KEHC 2677 (KLR), which addressed the recovery of money paid by mistake and the need for a bank to demonstrate that it took appropriate steps after being notified of an erroneous transaction.
The Court distinguished Mate v Stanbic Bank of Kenya Limited [2023] KEHC 49 (KLR), where the bank’s response was found to be reasonable in the circumstances. In Kiburi, the Court considered the delay in acting and the absence of evidence that adequate steps had been taken to preserve the funds.
Read together, these decisions illustrate that the outcome of a mistaken-transfer claim will turn on the particular facts. The central question is not simply whether a transfer was erroneous, but also what the bank knew, when it knew it, what action it took and whether that action met the standard of reasonable diligence.
What should a customer do after sending money to the wrong recipient?
A customer who discovers an erroneous transfer should act immediately. Practical steps include:
- Notify the bank or payment service provider immediately. Use the official customer-care channels and request a reversal or recall of the transaction.
- Keep evidence of the complaint. Preserve transaction messages, receipts, complaint reference numbers, emails and any written responses.
- Follow up promptly and in writing. Ask the bank to confirm the action taken and the status of the recovery process.
- Preserve all relevant records. Record the transaction date, amount, recipient details available to you and the time the error was reported.
- Consider the appropriate legal remedy. If the bank fails to respond reasonably and the money is not recovered, obtain legal advice on the available recovery options and the evidence required to establish liability.
Customers should not assume that a reversal is guaranteed. The funds may already have been withdrawn, and the bank must act within the law and the limits of its authority. Nevertheless, prompt reporting and proper documentation can be important when establishing whether reasonable steps were taken.
A separate lesson on challenging legal costs
The appeal also raised the question of instruction fees awarded to a successful litigant who was an advocate representing himself. The High Court observed that the Small Claims Court had awarded general costs of the suit rather than expressly awarding instruction fees in its judgment. The detailed costs were subsequently assessed through taxation.
The Court held that a challenge directed at the taxing officer’s assessment should be brought through the appropriate reference procedure under the Advocates (Remuneration) Order, rather than by appealing against a judgment that had only awarded general costs. The bank had therefore adopted the wrong procedure for challenging the taxation.
This aspect of the judgment is a useful reminder that parties must distinguish between challenging a court’s substantive judgment and challenging the subsequent assessment of costs.
Conclusion
Kenya Commercial Bank Limited v Kiburi reinforces the importance of prompt, reasonable and evidence-based action when a bank receives notice of an erroneous transfer. While banks must respect customer confidentiality and cannot necessarily reverse transactions without the required authority, they are expected to take reasonable steps within their control to prevent the loss from worsening.
For customers, the decision underscores the importance of reporting mistakes immediately and retaining evidence of every communication. For financial institutions, it highlights the need for effective complaint-handling procedures, timely escalation and clear records of the steps taken to protect funds after an error is reported.