Policy of no refund after payment is illegal in Nigeria, Court rules

Enugu State High Court has set aside policy of no refund of money after payment by service providers.

On 28 July 2021, Patrick C Chukwuma, a legal practitioner with the law firm of Eze, Dimude, Eze & Co filed a suit against Peace Mass Transit Limited challenging the latter’s policy of “no refund of money after payment”.

The incident that led to the suit occured on 10/2/2021 when the Plaintiff purchased a ticket from the Obollor-Afor branch of Peace Mass Transit Limited to convey him to Enugu.

Following a two-hour delay occasioned by the absence of passengers, the Plaintiff returned to the ticketing office and asked for a refund of the #500 he paid as the transportation fare.

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Staff members of the defendant however refused to refund the money, insisting that their company policy was that money paid for transport fare could not be returned to the passenger and citing the statement written on their ticket to that effect as conclusive proof of their position.

When Barrister Chukwuma tried to explain to them that their policy was unlawful, as the law mandates them to refund fares for services that have not been provided, they retorted in a rude manner, prompting the learned counsel to leave their park and seek alternative means of traveling back to Enugu.

A letter written by the lawyer to Peace Mass Group of companies demanding an apology and refund was neglected, prompting the lawyer’s law firm to institute suit number: E/514/2021 Patrick Chukwunwike Chukwuma v Peace Mass Transit Limited.

The suit asked the court to determine a sole question which was “whether the defendant’s policy of ‘no refund of money after payment’ is in violation of Section 120 of the Federal Competition and Consumer Protection Act 2018, especially when the contractual obligation to convey the plaintiff to his preferred location was terminated”.

The Plaintiff through his team of lawyers led by Barrister Tochukwu Odo, among other grounds, argued that the Federal Competition and Consumer Protection Act 2018 is the primary law on questions of consumer transaction in Nigeria and that by virtue of section 120 of the law, the consumer had a right to cancel any advance booking, reservation or order for any goods or services subject only to the deduction of a reasonable charge by the service provider.

The Defendant through their counsel Barrister Titus Odo raised technical arguments on the jurisdiction of the court and mode of commencement of the suit.

Hon. Justice C. O. Ajah of the High Court of Justice in his judgment delivered on 7 April, 2022, promptly dismissed the objections of the defendant and upheld the arguments of the plaintiff.

The Hon. Judge, after a thorough analysis of the provisions of the Federal Competition and Consumer Protection Act 2018 vis a vis the conduct of the parties in the case, decided that indeed the policy of no refund of money after payment was illegal, null and void in light of the provisions of Sections 120, 104, 129(1)(a) and (b) (iii) of the Federal Competition and Consumer Protection Act 2018.

The court thereafter made a declaration that the refusal of the defendant to refund the Plaintiff the money paid for the transportation fee from Obollor-Afor to Enugu on 10/2/2021 was unlawful.

The court further ordered the defendant to pay the sum of #500,000 as damages to the Plaintiff.

Analysts contend that the judgment in the case puts service providers on notice that more Nigerians are now alive to their rights as citizens and will not hesitate to enforce the same should the need arise.

It also puts an end to the menace of service providers who collect money from consumers and refuse to refund the same when they don’t offer the services for which the money was collected in the first place.