Texas Bank Sues Victim/Customer
January 28, 2010PlainsCapital bank–based out of Lubbock, TX–is counter suing a customer who lost $800,000 in a hacking incident.
Essentially, hackers based out of Italy and Romania somehow gained access to the on-line banking username and password of Hillary Machinery, Inc. This was used to legitimately access Hillary’s on-line banking accounts, and over $800,000 was wired to overseas accounts. The bank recovered about $600,000 of the funds.
Hillary demanded that the bank pay the remaining amount, stating the bank didn’t have adequate security in place. The bank counter sued asking for “the court to certify that its security procedures were ‘commercially reasonable,’” which is pretty weird.
I guess the bank’s in a position where they can’t sue for money, and don’t want to lose $200 grand, so they’re essentially asking the courts to state that their systems are secure. It’s a pretty smooth move on the part of the bank, since such a ruling would mean that any of the bank’s other customers looking to sue the bank for similar incidents would be pre-empted.
Who would I side in this case? I’d have to side with Hillary. Hillary’s been negligent with protecting their password in some way (I’m guessing surreptitiously installed trojans that collect passwords), but in many cases there is no way for bank clients to know.
On the other hand, the bank had plenty of data to know about Hillary’s past banking activities, and could have placed a red flag for instances where wire transfers detract from said history. I mean, credit card companies do it, so we know it’s possible to have such a system implemented.
Although, such a system cannot be cheap. And, there’s the ill-effect of annoyed people who form part of the international set, if not the jetset.
Well, no one said that banking is supposed to be easy.
(Feb. 18, 2010: there’s more to the story now)
