Cyber-Theft from Our Nation’s Banks a Growing Threat

We are all suffering from the mistaken idea that our money is “safe” after we put it in a bank. The fact is your money is at risk every day as it sits in your bank or with your financial services provider. It isn’t necessarily because those institutions will waste it, misspend it, or invest it badly. It’s because of the newest yet the oldest financial problem, bank robbery.

Now, it isn’t that we have to worry about a resurgence of the old fashioned way of robbing banks. Criminals aren’t stealing millions by running into bank lobbies and making frightened cashiers empty out tills into pillow cases. No, the problem is the new, self-styled cyber-criminal using the Internet to steal millions from banks, and often the theft happens days before the bank is even aware it occurred.

Cyber-theft is a growing and dangerous problem. Unfortunately, many banks and other financial services haven’t taken enough measures to stop or even detect these thefts until it is too late. Worse, in many cases banks and financial services are telling account holders — that would be you and me — that the loss is irretrievable and, well, you are just out of luck. The cash is gone and there’s nothing that can be done about it.

Most of these cyber-thieves are from Ukraine or other former Soviet Bloc countries and it’s been going on for nearly 20 years. Specializing in Corporate Account Takeover’s (CATs), these foreign thieves create fake accounts and via the Internet worm their way into the computer records of banks and their customers and successfully transfer millions in relatively small amounts to untraceable accounts.

And the dirty little secret: unlike our individual bank accounts that are covered by FDIC insurance, the accounts of small businesses, non-profits, cities and their police and fire departments (i.e. your tax dollars) are NOT covered by any such insurance guarantees. So once the money is gone, it’s gone forever.

The scariest thing is that banks and financial services seem more interested in spending large sums of money on lawyers charged with preventing account holders from suing to get their lost money back than they are in putting in place preventive measures to stop the theft in the first place.

But things are heating up for these recalcitrant banks though.

For instance, TRC Operating Company, an independent oil producer based in Taft, California, is suing its bank to recover $299,600 that organized cyber thieves stole from the company accounts held at United Security Bank of Fresno.

TRC isn’t the only one. CAT victims are starting to demand compensation from banks asleep at the switch. Recently in California, Village View Escrow Company of Redondo Beach was successful in winning a settlement sufficient enough to cover its legal costs for suing its bank plus some extra.

In Michigan a state circuit judge ruled that banks and financial services had to offer more than bland apologies in CAT cases. The standard of “good hearts, empty heads,” the judged said, doesn’t meet the demands of reasonable protection for customer’s accounts.

Also, in Portland, Maine, Patco Construction won a suit against its bank for a CAT theft. The court ruled that even though the bank had instituted cyber security measures to industry standards, those standards are so deficient as to have made the bank’s efforts unsatisfactory.

These major cases show that CAT victims are neither remaining silent, nor taking their loss without seeking redress. Banks and the financial services industry need to step up their game on cyber security and lawmakers should act to bring more transparency to the process. The days of just doing a minimal job at prevent cyber-theft must end and better theft prevention measures instituted. Customers already expect that their money is safe in the bank, it’s time to ensure that it is.

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Posted by on November 12, 2012.
Filed under corruption, Culture Of Corruption, Democrats, Domestic Terrorism, Dumb Criminals, Dumbasses, Economics.
Warner Todd Huston is a Chicago-based freelance writer, has been writing opinion editorials and social criticism since early 2001 and is featured on many websites such as Andrew Breitbart's BigGovernment.com and BigJournalism.com, RightWingNews.com, CanadaFreePress.com, RightPundits.com, StoptheACLU.com, Human Events Magazine, among many, many others. Additionally, he has been a frequent guest on talk-radio programs to discuss his opinion editorials and current events.He has also written for several history magazines and appears in the new book "Americans on Politics, Policy and Pop Culture" which can be purchased on amazon.com. He is also the owner and operator of PubliusForum.com. Feel free to contact him with any comments or questions, EMAIL Warner Todd Huston: igcolonel .at. hotmail.com"The only end of writing is to enable the reader better to enjoy life, or better to endure it." --Samuel Johnson

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  • Commander_Chico

    The fact is your money is at risk every day as it sits in your bank or with your financial services provider.

    Wrong, at least WRT banks, unless you have more than $250,000 in a single bank. Ever hear of the FDIC?

    As for the cases cited, I suspect the companies gave up their own account information themselves or were commercially defrauded and are now trying to blame the banks for their own negligence.

    As with Warner’s foray into Ukrainian politics in behalf of Vladimir Putin, the stink of pay-for-play PR bloggery is strong with this piece.

    • warnertoddhuston

      You are an idiot. Look at the fifth paragraph you brainless moron. Try actually reading something before making yourself look stupid… or stupider as the case may be.

      • http://pulse.yahoo.com/_DZW3MFYY3FVGQXZOGWVY7XCOTI Terry Dixon

        But the fifth paragraph is wrong. FDIC does in fact cover deposit accounts of small businesses, non-profits, and even cities.

        https://www.fdic.gov/edie/fdic_info.html#11g

        • herddog505

          This is very good information.
          About the only thing that can be said in WTH‘s defense is that FDIC won’t cover ALL the loss. Depending on the size of the account, it may only cover pennies on the dollar.

          As for WTH, I believe that he owes Commander_Chico an apology.

      • Commander_Chico

        How much did you get paid for writing this BS?

  • herddog505

    Gold just keeps looking better, doesn’t it?

  • sam

    Doing business in
    Ukraine is not so easy, this economy is very regulated. You should have
    support and consultations of a local bank for business without problems in
    this country. I created a list of trustworthy Ukrainian banks
    http://ukraine-vacation-guide.com/dir/bank/35 They are good both for business
    and private issues. What else Ukrainian banks you can recommend?

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