FDIC Warning on ACH Fraud – One Year Later
Almost a year ago the Federal Deposit Insurance Corporation warned about the increase of ACH/wire fraud against small and medium-sized businesses. Since then, there has been a continuing stream of incidents and several high-profile cases, including Hillary Machinery vs. PlainsCapital Bank, Experi-Metal Inc. vs. Comerica Bank, and PATCO vs. Ocean Bank – a larger conflict that shows that this crime can affect business and banks of all sizes.
The Federal Bureau of Investigation estimates that 205 separate businesses have reported incidents of corporate account takeover since 2004 – the bulk of them in the past year – and says fraud losses may top $40 million. According to Charisse Castaganoli, adjunct law professor at John Marshall Law School and an information security law expert, “The FFIEC was out ahead of identity theft by requiring two-factor authentication back in 2005, but didn’t consider the sophistication of malware in terms of its ability to interweave inside of a legitimate connection.”
Unfortunately, despite the overwhelming evidence that two factor authentication and strong security measures in general can help, banking institutions have not moved quickly on security improvements. For more information on securing your data with two factor authentication, contact our specialists.
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