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Park Sterling Bank in Charlotte is battling to retrieve hundreds of thousands of dollars it refunded to a commercial customer who was defrauded by cyber thieves.
April 9 -
A Missouri court has found that a bank provided the right security to prevent wire transfer fraud, and the customer who declined to use it must eat the loss.
April 5 -
Hackers backed by China's military appear to have resumed a campaign of cyberattacks on U.S. businesses. The targets, which in previous attacks included financial firms, are thought to remain the same.
May 20 -
KPMG's latest Data Loss Barometer offers clues to shifts in how cyber-theft occurs, with good and bad news for bankers.
February 26 -
A new bill proposed in the Senate, the Deter Cyber Theft Act, is meant to help prevent nation-states from stealing U.S. business secrets.
May 8
United Security Bank in Fresno, Calif., has agreed to pay $350,000 to compensate TRC Operating Company for losses suffered from a cybertheft attack.
In 2012 TRC filed a complaint for damages in the Kern County Superior Court alleging that the bank failed to offer a "commercially reasonable" security procedure to protect TRC's funds and failed to process the fraudulent wires transfers in "good faith."
This month United Security Bank, a commercial banking subsidiary of $663 million-asset United Security Bancshares (UBFO), decided to settle before the court was to rule on a summary judgment motion filed by TRC, an independent oil production company located in Taft, Calif., according to TRC's attorney Julie Rogers, who works for The Dincel Law Group.
TRC alleged that hackers managed to access its United Security bank accounts stealing a total of $3,450,670 over a five-day period through twelve fraudulent wire transactions in 2011. But the bank has denied liability on alleged 'red-flag' indicators that the wire transfers were fraudulent. Ultimately, only $299,600 went missing from TRC's corporate account.
California businesses victimized by hackers who manage to access an online corporate banking account and divert funds have the option to sue the bank under Division 11 of the California Commercial Code. Whether the loss is $500 or $5 million it allows the recovery of the missing amount plus interest. If the bank pays that amount the victim cannot seek consequential damages or attorney fees, which sometimes are much higher than the initial fraud losses, Rogers says, putting at a disadvantage small businesses with limited resources.
TRC's owners Tracy Rogers, Ronnie Rogers and Charles Comfort say they tried to negotiate the recovery of their alleged losses directly with the bank but it chose to resolve the matter in the courts. And according to Comfort TRC decided to file a lawsuit against USB "for the principle of the matter knowing the law made it impractical to recover much more than $299,600."
Cyber theft is a big issue for small companies, says Karen McCarthy, president of YourMoneyIsNotSafeInTheBank.com. "All too often, a business hit by [corporate account takeover fraud] " either absorbs the loss or goes into bankruptcy, she said.
