US court dismisses bank's counter-suit against hacked customer

A US court has rejected BancorpSouth's counter-suit against a former commercial customer it sought to hold liable for losses related to an ACH and wire fraud case.

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US court dismisses bank's counter-suit against hacked customer

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In 2010, Choice Escrow and Land Title fell victim to hackers who obtained its online banking details using malware and wired more than $400,000 to a bank in Cyprus.

Later that year, Choice sued BancorpSouth for failing to provide "commercially reasonable security", demanding damages and recovery of losses related to the attack.

Earlier this year, the bank hit back with a counter-suit, arguing that Choice should be held responsible for losses, damages and legal costs.

According to BankInfoSecurity, a US district court in Missouri has dismissed the counter-claim despite magistrate judge John Maughmer conceding it was a "very close call".

The case was one of several in the US over the last two years that have seen banks and business customers argue over who is responsible for online account hacks.

Last year a Michigan court found in favour of Experi-Metal in its $560,000 cyber-heist suit against Comerica Bank, concluding that the provider should have done a better job of picking up the fraudulent transactions.

This contrasted with an earlier decision in Maine, where the presiding magistrate ruled that Ocean Bank was not responsible for the loss of around $345,000 from a business customer account following a similar cyber-attack.

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Comments: (1)

Ketharaman Swaminathan

Ketharaman Swaminathan Founder and CEO at GTM360 Marketing Solutions

"This contrasted with an earlier decision in Maine, where the presiding magistrate ruled that Ocean Bank was not responsible for the loss of around $345,000 from a business customer account following a similar cyber-attack."

This is no longer valid. As on 3 July 2012, the United States Court of Appeals, First Circuit, reversed the decision of the lower court. So, Ocean Bank has now been held responsible. For the bank, this is another example of "unintended consequences", as I'd pointed out here.

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