June 20, 2011
Niles Nerd

Think Your Bank Is Responsible for Providing Adequate Security? Maybe Not!

[this post is by Nerd Dennis Housecknecht]

Secure - Nerds On Site

source: freedigitalphotos.net


These are US court cases, but it is an example of a battle that is, or will be, fought in every country. There is little in the way of case law to clearly determine who is liable when inadequate security results in fraudulent bank transactions. Who will pay when the money cannot be recovered? Until recently, many banks have chosen to cover the losses in order to avoid the publicity associated with these fraudulent transactions.
At this point, there is no hiding cybercrime or the associated bank fraud – it is in the headlines every day. Here are two cases where questionable security practices lead to large losses:
In the Patco case, the courts have decided that The Bank’s security was “good enough” and Patco is on the hook for the losses.
In the Experi-Metal case, the courts ruled that the bank was liable.
These court battles have huge implications for SME clients worldwide. Losses like this can threaten the very existence of an SME. This truly is the “Golden Age” for cyber-criminals, and these losses are becoming more common.
At least 90% of these crimes could be prevented if security were more of a priority. SMEs will spend thousands to prevent physical theft, but still have not come to understand the threats of cyber-crime. If you have an I.T. provider, have you talked to them about the growing problem of cyber-crime? Feel free to contact Nerds On Site. We are happy to have these sorts of conversations with our clients in an effort to make their business technology more secure and dependable.

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