This post is part of the series, SmallBusiness.com Guide to Business Computer and Tech Security: Advice, alerts and information about digital security threats faced by small businesses. You can browse other posts in the series below.
Cyberthieves steal hundreds of millions of dollars a year from the bank accounts of U.S. businesses. Many business owners are discovering their bank is not required to make them whole.
Next time you hear a commercial from a bank touting how friendly it is to small businesses, re-read or re-play this story from John Ydstie of NPR’s Morning Edition.
In it, he shares the alarming stories of several business owners whose bank accounts were hacked by cyberthieves, but whose banks refused to reimburse them.
Why? Because they don’t have to. No kidding.
“Individuals are pretty well-protected when it comes to fraudulent transfers from their bank accounts. Regulation E of the Electronic Fund Transfer Act requires banks to bear the burden in most circumstances. That’s not the case for small businesses, even if they’re owned by a single person.” – John Ydstie (NPR)
The law does require banks, under the Uniform Commercial Code, to offer business customers a “commercially reasonable” security protocol. If the bank follows that protocol, it can refuse to reimburse businesses that are victims of fraudulent money transfers.
And before you start thinking this couldn’t be that big a problem, it’s big and growing. The most recent FBI data show a huge growth in this kind of fraud against businesses. More than 8,000 companies have been victimized over the past two years. Their losses total nearly $800 million.
(Continue reading on NPR.org: “When Cyber Fraud Hits Businesses, Banks May Not Offer Protection“)