A large number of banks, credit unions and other financial institutions just pushed customers onto new e-banking platforms that asked them to reset their account passwords by entering a username plus some other static identifier — such as the first six digits of their Social Security number, or a mix of partial SSN, date of birth or surname. Here’s a closer look at what may be going on (spoiler: small, regional banks and credit unions have grown far too reliant on the whims of just a few major online banking platform providers).
You might think it odd that any self-respecting financial institution would seek to authenticate customers via static data like partial SSN for passwords, and you’d be justified for thinking that, too. Nobody has any business using these static identifiers for authentication because it’s all for sale on most Americans quite easily and cheaply in the cybercrime underground. The Equifax breach might have “refreshed” some of those data stores for identity thieves, but most U.S. adults have had their static details on sale for years now.
On Feb. 16, KrebsOnSecurity reader Brent Hoeft shared a copy of an email he’d just received from his financial institution Associated Bank, which at $30+ billion in assets happens to be Wisconsin’s largest by asset size.
A 2011 hacker break-in at banking industry behemoth Fidelity National Information Services (FIS) was far more extensive and serious than the company disclosed in public reports, banking regulators warned FIS customers last month. The disclosure highlights a shocking lack of basic security protections throughout one of the nation’s largest financial services providers.
An Oregon agricultural products company is suing its bank to recover nearly a quarter-million dollars stolen in a 2010 cyberheist. The lawsuit is the latest in a series of legal challenges seeking to hold financial institutions more accountable for costly corporate account takeovers tied to cybercrime.
A decision handed down by a federal appeals court this week may make it easier for small businesses owners victimized by cyberheists to successfully recover stolen funds by suing their bank.
The U.S. Federal Court of Appeals for the First Circuit has reversed a decision from Aug. 2011, which held that Ocean Bank (now People’s United) was not at fault for a $588,000 cyberheist in 2009 against one of its customers — Patco Construction Co. The appeals court sent specific aspects of the earlier decision back to the lower court for review, but it encouraged both parties to settle the matter out of court.
A closely-watched court battle over how far commercial banks need to go to protect their customers from cyber theft is drawing to a conclusion. Experts said the decision recommended by a magistrate last week — if adopted by a U.S. district court in Maine — will make it more difficult for other victim businesses to challenge the effectiveness of security measures employed by their banks.
In May 2009, Sanford, Maine based Patco Construction Co. filed suit against Ocean Bank, a division of Bridgeport, Conn. based People’s United Bank. Pacto used online banking primarily to make weekly payroll payments. Patco said cyber thieves used the ZeuS trojan to steal its online banking credentials, and then heisted $588,000 in batches of fraudulent automated clearing house (ACH) transfers over a period of seven days.
In the weeks following the incident, Ocean Bank managed to block or claw back $243,406 of the fraudulent transfers, leaving Patco with a net loss of $345,445. Because the available funds in Patco’s account were less than the total fraudulent withdrawals, the bank drew $223,237 on Patco’s line of credit to cover the transfers. Patco ended up paying interest on that amount to avoid defaulting on its loans.
Patco sued to recover its losses, arguing in part that Ocean Bank failed to live up to the terms of its contract when it allowed customers to log in to accounts using little more than a user name and password. On May 27, a magistrate recommended that the court make Patco the loser by denying Pacto’s motion for summary judgment and grating the bank’s motion.