An interesting business litigation suit alleging cybercrime fraud has been settled for a reported $600,000 before the case could proceed to trial. In this California business litigation case, the California small business Village View Escrow alleged that their banking institution failed to enact appropriate levels of security to protect their online banking system. According to Village View Escrow, Professional Business Bank was thus liable for the alleged electronic siphoning of approximately $466,000 from Village View’s bank accounts which then ensued.
Unfortunately, cybercrime fraud like this appears to be a booming industry. It can be difficult, though by no means impossible, for small businesses like Village View Escrow to hold larger financial institutions liable for damages in alleged cybercrime cases like this one. Typically, it seems that laws are written to favor financial institutions, however as this case appears to demonstrate, small businesses can prevail in business litigation suits and gain settlements that reimburse them for damages suffered due to electronic fraud.
In this particular case, Village View Escrow claimed that the single-factor authentication of a username and password put in place by Professional Business Bank did not follow federal online banking security advice. This apparently makes it easier for cyber criminals to breach security and make off with ill-gotten electronic gains as is alleged in this incident. An allegedly preferable method of security would be to have multi-factor authentication requiring at least one additional step of verification, such as a one-time pass code token.
Now that the settlement has been reached, this business litigation case will not go to trial. Still, Village View Escrow has been reimbursed for a higher sum than what was allegedly stolen from their accounts. This small California business can certainly view the settlement as a triumph and hopefully more financial institutions will implement multi-factor authentication methods in light of the severity of this case.
Source: PC World, “California Business Scores Settlement in Thorny Cybercrime Case,” Jeremy Kirk, June 26, 2012