Court Places Responsibility for Fraud Loss on Business Account Owner

Credit unions that have long complained about the high costs of fraud may see a glimmer of hope in a recent case in which an 8th Circuit Appellate Court ruled that a company that declined to participate in the security protections offered by its bank is responsible not only for its $440,000 loss for a fraudulent wire, but also for the bank’s legal fees. The ruling relied on the fact that the bank had a reasonable security program in place as well as additional security features that the company declined to adopt. The ruling applies only to business account owners. [6/19/14]