PlainsCapital Bank has settled a lawsuit it bought against one of its own business customers after crooks stole over $800,000 from the company's account.
Cybercrooks stole the money from the PlainsCapital account of Texas-based Hillary Machinery last year via ACH and wire transfer.
Around $600,000 was recovered but when Hillary Machinery called on its bank to refund the remaining $200,000 it was hit with a lawsuit asking the court to affirm that security was reasonable and that the transfers were processed in good faith.
The company fought back with its own suit, arguing that the transfers, which went to Europe, should have set off red flags in the bank's fraud detection systems.
The pair have now come to a settlement in what was widely seen as an important test case following a sharp rise in account hijackings of business credentials.
Terms of the settlement have not been disclosed, but it comes just days after the courts threw out a motion by the bank to hold the hearings in private.
Recent research from Guardian Analytics and Ponemon Institute found that the US banking industry is failing to protect its small business customers from a destructive epidemic of cyberfraud that is sweeping the nation.
The research found that 55% of businesses reported experiencing fraud in the last 12 months, with 58% of fraud enabled by online banking activities. Yet, despite the soaring crime rate, 80% of banks failed to catch fraud before funds were transferred out of their institution. In 87% of fraud attacks, the bank was unable to fully recover assets.