After being targeted by cybercriminals, a company borrowed $336,000 from their bank. The\u00a0company has now refused to repay the loan or even acknowledge it was loaned any money. The\u00a0bank has consequently taken the customer to court.<\/p>\n
Wallace & Pittman is a company dealing with real estate, legal and escrow services. It was\u00a0targeted by cybercriminals on May 9, 2012. The company which is based in Charlotte, N.C was the\u00a0target of a sophisticated and well timed cyber heist. On the morning of May 9th, the company had\u00a0just closed a real estate deal which amounted to $386,600.61. It had initiated a wire transfer of the\u00a0same amount to a bank in Virginia Beach. Several hours later, cybercriminals initiated their own,\u00a0but rogue transaction of $336,600.61 \u2013 exactly $50,000 less.<\/p>\n
That very day at around 3 p.m, Park Sterling Bank which is based in Charlotte, and is the banker of\u00a0the victim received a wire transfer order of $336,300.61 from the law firm. The bank insists that the\u00a0order came through the law firm\u2019s legitimate username and password. It also says that the order\u00a0passed the PIN code, challenge and response test. Having verification, the bank processed the order\u00a0which was destined to JP Morgan Chase, New York which was an intermediary. The funds were\u00a0then transmitted onward to a Moscow-based bank.<\/p>\n
Much later during the day, Wallace & Pittman received an electronic wire transfer confirmation.\u00a0The firm called the bank and said that the wire transfer was not authorized. The firm also alerted the\u00a0bank of an intrusion into their system by a hacker. It said that an electronic intrusion into its systems\u00a0resulted in the installation of a certain strain of a\u00a0keystroke-logging virus. The firm suspected that\u00a0rogue virus was enjoined in a phishing email which had been designed to look as though it came\u00a0from National Automated Clearing House Association (NACHA). NACHA is a trusted network\u00a0used by many entities for a wide range of financial transactions in the U.S.<\/p>\n
Park Sterling Bank like many banks in U.S allocated a provisional credit to the law firm. This credit\u00a0is supposed to protect the customer from overdrawing their trust account. This is also done to allow\u00a0for some time if the wire transfer will be returned. Both parties having realized what had just\u00a0happened, PSB informed the customer that the money credited in its account needed to be refunded\u00a0by the end of the month.<\/p>\n
On the day the loan was to be billed the loan amount to the trust account of the firm, a complaint\u00a0was filed by Wallace & Pittman against the bank. On that very day, May 30, 2012, the firm obtained\u00a0a temporary order restraining the bank from debiting any of the firm\u2019s accounts with the loan\u00a0amount. Wallace & Pittman pulled the carpet from under the bank by withdrawing all the monies in\u00a0its three accounts at the bank the following month. Consequently, the restraint was dismissed.<\/p>\n
PSB went to court to have its former customer pay back the loan plus interest accrued. However,\u00a0Wallace & Pittman countered the PSB\u2019s claims by saying that never did the bank, before the return\u00a0of the funds, specifically say that the funds credited to its trust account were a provisional credit. In\u00a0fact, the bank only started calling the \u2018returned funds\u2019 as provisional credit ten days after it had\u00a0credited the firm\u2019s account. To prove their point, the firm produced its bank ledge transactions\u00a0where the bank is seen to have initially classified the amount as \u2018reverse previous wire entry\u2019.<\/p>\n
Wallace & Pittman refused to comment on the ongoing court battle with its former bank. However,\u00a0the firm says that the allegations by the bank are unfounded as at the time of the theft, it did not\u00a0have in place commercially reasonable security procedures to allow it run secure online banking\u00a0services. To solidify its case, the law firm added that the IP address used for the fraudulent transfer\u00a0was not associated with it. Moreover, the bank knows that the law firm had never before initiated a\u00a0wire transfer to Moscow or to any other place outside the U.S.<\/p>\n
According to Wallace & Pittman, PSB was in a positioned to question the authenticity of an\u00a0international wire transfer coming from the firm. The firm further states that the bank was in a good\u00a0position to know of the many cyberheists being conducted today especially those involving Russian\u00a0based gangs.<\/p>\n
According to the law firm, PSB security authentication process involves a couple of passwords. To\u00a0transfer money online, all one had to do was enter their username and password. When a customer\u00a0wants to do a wire transfer, one was supposed to enter a banking ID and a 4-digit static wire code.<\/p>\n
There would be two challenge questions after the wire code was transmitted. According to Wallace\u00a0& Pittman, their answers to the challenge questions were always the same. The bank had\u00a0preprogrammed the questions based on the instinctive simple four letter word.<\/p>\n
But as the story transpired later, the law firm was seen to be liable of the cyberheist and not the\u00a0bank.<\/p>\n","protected":false},"excerpt":{"rendered":"
After being targeted by cybercriminals, a company borrowed $336,000 from their bank. The\u00a0company has now refused to repay the loan or even acknowledge it was loaned any money. The\u00a0bank has consequently taken the customer to court. Wallace & Pittman is a company dealing with real estate, legal and escrow services. It was\u00a0targeted by cybercriminals on […]<\/p>\n","protected":false},"author":2,"featured_media":3162,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[37],"tags":[71,55,72,48,73,50,74,75,76,58,77],"class_list":["post-7269","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-security-news","tag-commercially-reasonable-security-measures","tag-cyber-heist","tag-escrow-firm-cyber-heist","tag-malware","tag-phish","tag-phishing","tag-phishing-email","tag-spear-phishing","tag-static-authentication","tag-us-cyber-crime","tag-view-escrow-inc"],"yoast_head":"\n