After the bank accounts of a California-based Escrow firm were drained a whopping $1.5 million\u00a0through a cyberheist, the firm closed shop. The company is now suing its former bank for the lost\u00a0money.<\/p>\n
The First Foundation Bank is being accused by Efficient Service through its state appointed receiver\u00a0that its security systems were nowhere near secure at the time of the cyberheist. The now defunct\u00a0Efficient Services Escrow firm is based in Huntington Beach. It argues that the bank acted almost\u00a0maliciously when it processed the future determining international fraudulent wire transfers. Three\u00a0fraudulent transfers siphoned off $1,558,439 and were done between December 2012 and February\u00a02013.<\/p>\n
There is an increasing number of lawsuits against banks seeking to hold them responsible for the\u00a0losses which arise when cybercriminals take over customers\u2019 accounts. The $1.5M suit which was\u00a0filed in the Superior Court in\u00a0Orange County is just one of the many lawsuits. In U.S, customers are\u00a0largely regarded to be at no fault if a hacker penetrates their bank account and manages to steal.<\/p>\n
However, the customer must report of the hacking early enough. Small businesses are now being\u00a0targeted by hackers mainly because they are unaware of such legal provision. They are also\u00a0surprisingly unaware of the huge risks involved when they are using online banking.<\/p>\n
The Huntington Beach based company cyberheist started on December 2012 when $432,215 was\u00a0transferred from its accounts to a bank in Moscow. This was followed by two more transfers\u00a0amounting to $1.1M to northern Heilongjiang Province of China.<\/p>\n
In 2011, Heilongjiang Province which is found on the northern side of China bordering Russia was\u00a0at the centre of an FBI cyberheist investigation. According to the FBI, cybercriminals had in the\u00a0previous year alone stolen around $20 million from small and medium sized companies. The funds\u00a0were stolen through wire transfer and sent to Chinese economic and trade based companies.<\/p>\n
Through the efforts of Efficient Services and the First Foundation Bank, the money transferred to\u00a0the Russian bank was recovered. The trail of the $1.1 in China had however long gone cold. The\u00a0law in California requires that hacked companies report the theft of funds immediately they\u00a0discover the theft. Once Efficient receivers reported of the theft incidences, the California\u00a0Department of Corporations demanded that the firm locates the stolen funds within three days.<\/p>\n
After a haggling effort to locate the stolen funds, it became apparent to Efficient that the money was\u00a0long gone. This consequently led the closure of the company by the state. A staff force of 9 was\u00a0rendered jobless due to the closure of the company.<\/p>\n
After Efficient Escrow Company was declared bankrupt, its appointed receiver lawyer sued First\u00a0Foundation Bank on December 6. In the lawsuit, the company wanted to recover the stolen $1.1M\u00a0on behalf of its former customers. In the suit, the company argues that the bank\u2019s security systems\u00a0were \u2018commercially unreasonable\u2019. It further alleges that the bank didn\u2019t act in good faith when\u00a0processing the fraudulent international transfers on \u2018behalf\u2019 of the company.<\/p>\n
The Uniform Commercial Code (UCC) which is applied by most of the states across U.S strives to\u00a0manage how wire transfers are done. It states that once a payment order has been received by a\u00a0bank in good faith in addition to any written agreement with the customer and in compliance with\u00a0the security procedure, the bank can proceed on to execute the payment order in the name of the\u00a0customer. Whether the payment order was authorized or not, the bank while acting in good faith and\u00a0following standard security procedure which is commercially viable should proceed on with the\u00a0transaction.<\/p>\n
However, with the current trend, the Efficient Escrow Company is highly unlikely to win this case.\u00a0Most commercial businesses rarely win in cases they have sued banks to recover monies stolen by\u00a0cybercriminals.<\/p>\n","protected":false},"excerpt":{"rendered":"
After the bank accounts of a California-based Escrow firm were drained a whopping $1.5 million\u00a0through a cyberheist, the firm closed shop. The company is now suing its former bank for the lost\u00a0money. The First Foundation Bank is being accused by Efficient Service through its state appointed receiver\u00a0that its security systems were nowhere near secure at […]<\/p>\n","protected":false},"author":2,"featured_media":3129,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[37],"tags":[87,55,72,83,62,48,50,88,89,86],"class_list":["post-7274","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-security-news","tag-california-cyber-crime","tag-cyber-heist","tag-escrow-firm-cyber-heist","tag-illegal-wire-transfer","tag-krebs","tag-malware","tag-phishing","tag-remote-access-control","tag-russian","tag-zeus-trojan"],"yoast_head":"\n