Bank not responsible for money stolen by online hackers.

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tc101
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Bank not responsible for money stolen by online hackers.

Post by tc101 » Thu Aug 24, 2017 11:40 am

A friend of mine had his business bank account hacked. The hackers stole $40,000. The bank says they are not responsible because it is a business account. He has talked to a lawyer but is not optimistic about getting the bank to pay.
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barnaclebob
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Re: Bank not responsible for money stolen by online hackers.

Post by barnaclebob » Thu Aug 24, 2017 11:45 am

I suspect there is more to this story than "online hackers".

In any case, the bank is only responsible as far as their fraud agreement goes. Its important for everyone to know what kind of fraud protections they have.

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tc101
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Re: Bank not responsible for money stolen by online hackers.

Post by tc101 » Thu Aug 24, 2017 2:49 pm

In any case, the bank is only responsible as far as their fraud agreement goes. Its important for everyone to know what kind of fraud protections they have.
I thought there was some standard bank fraud agreement that was created by federal law. Is that not true?

How good is the fraud agreement at Ally?
How good is the fraud agreement at Vanguard?
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barnaclebob
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Re: Bank not responsible for money stolen by online hackers.

Post by barnaclebob » Thu Aug 24, 2017 3:35 pm

Vanguard's fraud protection policy is listed here:

https://personal.vanguard.com/us/help/S ... ontent.jsp

It is surprising that fraudulent access would not be protected at a bank which is why I suspect there is more to your friend's story. What was the method and circumstances in which the money was taken? Debit card, credit card, wire transfer, stolen check, someone walked in and made a withdrawal?

Edit: It looks like many business accounts may indeed not have much fraud protection: http://www.npr.org/sections/alltechcons ... protection

Now is there some other kind of insurance that covers businesses in cases of fraud?

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Mlm
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Re: Bank not responsible for money stolen by online hackers.

Post by Mlm » Thu Aug 24, 2017 4:46 pm

I had this happen in my old job when the criminals hacked into a computer and initiated wire transfers to moles. The bank was not responsible but did get involved. A police report was filed and the FBI got involved. About half of the money was recovered. Several years later I got a call from the Secret Service that they had arrested 3 of the 5 persons involved and they had been extradited to the US and were being prosecuted. Luckily there was a daily limit on the amount of wire transfers. It could have been much worse.

Any theft should be reported to the police immediately.

pshonore
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Re: Bank not responsible for money stolen by online hackers.

Post by pshonore » Thu Aug 24, 2017 6:48 pm

barnaclebob wrote:
Thu Aug 24, 2017 3:35 pm
Vanguard's fraud protection policy is listed here:

https://personal.vanguard.com/us/help/S ... ontent.jsp

It is surprising that fraudulent access would not be protected at a bank which is why I suspect there is more to your friend's story. What was the method and circumstances in which the money was taken? Debit card, credit card, wire transfer, stolen check, someone walked in and made a withdrawal?

Edit: It looks like many business accounts may indeed not have much fraud protection: http://www.npr.org/sections/alltechcons ... protection

Now is there some other kind of insurance that covers businesses in cases of fraud?
A Fidelity policy would cover dishonest acts by employees. I would think most package policies offered to small businesses might offer coverage for bank fraud. Only a good agent can tell you for sure.

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Phineas J. Whoopee
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Re: Bank not responsible for money stolen by online hackers.

Post by Phineas J. Whoopee » Thu Aug 24, 2017 6:52 pm

US business bank accounts have fewer legal protections than consumer ones. It is a mistake to suppose they are the same.
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student
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Re: Bank not responsible for money stolen by online hackers.

Post by student » Thu Aug 24, 2017 8:15 pm

In general, same as business credit card unless the bank adds extra protection.

https://www.consumerreports.org/credit- ... otections/

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tc101
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Re: Bank not responsible for money stolen by online hackers.

Post by tc101 » Thu Aug 24, 2017 8:47 pm

I had this happen in my old job when the criminals hacked into a computer and initiated wire transfers to moles.
Was that a business account?
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Mlm
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Re: Bank not responsible for money stolen by online hackers.

Post by Mlm » Thu Aug 24, 2017 8:57 pm

tc101 wrote:
Thu Aug 24, 2017 8:47 pm
I had this happen in my old job when the criminals hacked into a computer and initiated wire transfers to moles.
Was that a business account?
Yes it was

Cyclone
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Re: Bank not responsible for money stolen by online hackers.

Post by Cyclone » Thu Aug 24, 2017 11:01 pm

As somebody said, business accounts do not have nearly the same protections as consumer accounts.

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JoMoney
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Re: Bank not responsible for money stolen by online hackers.

Post by JoMoney » Thu Aug 24, 2017 11:13 pm

As others have said, consumer protections aren't applicable to business accounts.
The Uniform Commercial Code puts the liability on the entity in the best position to stop the fraud from happening, and tends to put the onus on the business account holder to show they've taken every precaution in protecting the security of their account and access to it. If it was the banks bad security practices that allowed the 'hacker' to gain access then you've got something to fight about over who should be liable for the loss.
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Re: Bank not responsible for money stolen by online hackers.

Post by Pajamas » Thu Aug 24, 2017 11:36 pm

Interesting. Was the bank itself hacked? My guess is that it was the business's computer system that was compromised, not the bank's.

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tc101
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Re: Bank not responsible for money stolen by online hackers.

Post by tc101 » Fri Aug 25, 2017 11:12 am

I wish I could give you more details. Next time I talk to my friend I'll ask him, but he may not want me to go into detail in this online forum.
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