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Bank not liable for customer's US$440,000 cybertheft

Jaikumar Vijayan | June 19, 2014
BankcorpSouth can also recover attorney's fees from escrow firm, appeals court rules

The thefts have often pitted banks against their customers. The disputes have highlighted the issue of bank liability for commercial customer losses stemming from third-party fraud. The cases also involve agreements on commercial account security.

To date, courts have been split on the issues.

For instance, the Court of Appeals for the First Circuit faulted People's United Bank (formerly Ocean Bank) in a dispute over a similar online theft with a customer, construction company Patco.

Maine-based Patco lost $345,000 in an online cyberheist virtually identical to the one suffered by Choice Escrow. In that case, a three judge panel overturned a lower court decision, ruling that the the bank had failed to implement commercially reasonable security measures. The two parties later agreed to settle the dispute.

 

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