Detailed update on the upcoming Experi-Metal vs. Comerica trial. In brief, Experi-Metal is suing its bank, Comerica, for money ($560,000) it lost due to fraudulent wire transfers that resulted from a security breach.
The bank, Comerica, claims the fault of the lost money is entirely with Experi-Metal, while Experi-Metal claims that Comerica should have realized that a large number of wire transfer requests within a few hours was suspicious, especially considering it had only done two wire transfers in the two years prior to this incident.
Businesses do not enjoy the same legal protections afforded to consumer banking customers hit by cyber thieves, and most organizations will be held responsible for any losses due to phishing or account takeovers. But a rash of these attacks that has netted thieves more than $70 million over the last few years has caused some victim businesses and their lawyers to look for ways to hold banks more accountable, by pointing out ways in which the banks may not be living up to the somewhat nebulous state legal standards that govern commercial banking activities.
This case and other similar ones are putting pressure on small and mid-size banks, and the outsourcers who provide transaction processing services to them, to strengthen their security posture.
… more banks could and should offer the kind of technology employed by the major credit card networks, which try to build profiles of customer activity and then alert the customer or the issuing bank of any suspicious or unusual activity. But she said a large percentage of banks outsource the day-to-day customer transactions to third-party service providers, most of whom do not currently offer services that would conduct that transaction analysis.
When the costs of improving security posture are lower than the risk-weighted costs due to a breach, then these banks will move. I not mean to appear overly cynical here. It’s the banks’ fiduciary responsibility to move only when the risk analysis scale tips in favor of improving security. That’s what makes this trial so interesting.