Bank sues victim of $800,000 cybertheft
In twist, Texas bank sues business customer, claiming cybertheft not its fault
Computerworld - A Texas bank is suing a customer hit by an $800,000 cybertheft incident in a case that could test the extent to which customers should be held responsible for protecting their online accounts from compromises.
The incident, which was first reported by blogger Brian Krebs this week, involves Lubbock-based PlainsCapital bank and its customer Hillary Machinery Inc. of Plano.
In November, unknown attackers based in Romania and Italy initiated a series of unauthorized wire transfers from Hillary's bank accounts and depleted it by $801,495. About $600,000 of the amount was later recovered by PlainsCapital.
Hillary demanded that the bank repay it the rest of the stolen money. In a letter to the bank in December, Hillary claimed that the theft happened only because PlainsCapital had failed to implement adequate security measures.
PlainsCapital promptly filed a lawsuit in the U.S. District Court for the Eastern District of Texas asking the court to certify that its security procedures were "commercially reasonable." In its complaint, the bank noted that it had made every effort to recover the stolen money.
The bank sought to absolve itself from blame in the heist by stating that the unauthorized wire transfer orders had been placed by someone using valid Internet banking credentials belonging to Hillary Machinery. "PlainsCapital accepted the wire transfer orders in good faith" and had therefore not breached any of its agreements with Hillary, the bank said in its complaint.
The complaint itself is somewhat unusual in that it doesn't seek anything specific from Hillary. Rather, all it asks is for the court to certify that its systems are reasonably secure.
In an interview with Computerworld today, Troy Owen, Hillary's vice president of marketing, disputed the bank's claims. Owen insisted that it was the bank's failure to implement strong authentication and fraud-detection measures that had enabled the theft.
"The bank is doing what their attorneys are telling them to do, which is to deny everything," Owen said. "They obviously can't just come out and say they know their systems are insecure, so they are trying to bully us with a lawsuit."
Owen today claimed that Hillary had no idea how or when its online banking credentials might have been accessed by the cyber thieves.
While the transfers were initiated using valid log-in credentials, there were several details that should have alerted bank authorities that all was not right, Owen said. The biggest red flag should have been that the money was being transferred to foreign destinations, which had never happened before with Hillary's account, Owen said.
The fact that dozens of transfers were made in a two- or three-day period, many of them involving sums that were outside the normal range of transfers initiated by Hillary, should have been another clue about fraudulent activity, he said. Some of the transfers involved sums in excess of $100,000, while others were as small as $2,500. Each of the transfers was also made to a different account, which was highly unusual. Hillary's typical money transfers involve the same limited set of accounts, Owen said.
- Securing Mobile App Data - Comparing Containers and App Wrappers Analysts agree that Mobile Device Management (MDM) is not enough when it comes to securing app data. Although it remains a critical component...
- PCI 3.0 Compliance In this white paper, learn how PCI-DSS 3.0 effects how you deploy and maintain PCI compliant networks using CradlePoint devices.
- Mitigating Security Risks at the Networks Edge This white paper provides strategies and best practices for distributed enterprises to protect their networks against vulnerabilities, threats, and malicious attacks.
- 5 Strategies for Modern Data Protection Read the five strategies for modern data protection that will not only help solve your current data management challenges but also ensure that...
- Business-driven data protection Setting up data protection infrastructures with your organizations' core mission or business in mind is key. In this webinar, the ARCserve team will...
- On-Demand Webinar: Mind the Gap! Watch the webinar featuring Bob Janssen, CTO and Co-Founder of RES Software, to start building a solid foundation for business and IT to... All Security White Papers | Webcasts
Our new bimonthly Internet of Things newsletter helps you keep pace with the rapidly evolving technologies, trends and developments related to the IoT. Subscribe now and stay up to date!