circumstances may be considered by the courts in determining fault: • The normal course of business for the companies or the industry; • Prior dealings between the companies (e.g., had the companies only dealt in written checks prior to the incident); • Whose accounts were hacked; • Contributory actions (e.g., forwarding a hacked email or deleting an email known to be fraudulent without notifying the other party); • Common cyber security techniques (e.g., multi-factor authentication); • Company IT and security policies (e.g., whether the actions were in breach of the company’s own IT and security policies); • Prior red flags of suspicious activity; and • Whether a contract or an agreement had actually been reached. While there is no clear-cut rule for apportioning liability based on current case law, a bank’s business and consumer clients should continue to exercise care and implement proper processes and procedures for initiating and confirming wire transfers to reduce the risk of bearing the liability of a fraud. 1. UCC § 4-104(a) 2. Travelers Cas. & Sur. Co. of Am. v. Wells Fargo Bank N.A., 374 F.3d 521, 525 (7th Cir. 2004) 3. See J. Walter Thompson, U.S.A., Inc. v. First BankAmericano, 518 F.3d 128, 132 (2d Cir. 2008) 4. Cincinnati Insurance Company v. Wachovia Bank, N.A., Case No. 08-CV-2734 (PJS/JJG) (D. Minn. Nov. 8, 2010) 5. Id. at p. 6 – 7. 6. Source is https://www.ic3.gov. If you suspect fraud, notify FinCEN, IC3, and the local FBI or Secret Service office immediately. 7. Arrow Truck Sales, Inc. v. Top Quality Truck & Equip., Inc., Case No. 8:14-cv-2052-T-30TGW, 13 (M.D. Fla. Aug. 18, 2015) 8. Id. at p. 13 9. See, e.g., Nebraska Uniform Commercial Code § 3-404(d), “The drawer is in the best position to avoid the fraud and thus should take the loss.”, comment #3; see also, State Sec. Check Cashing, Inc. v. Am. Gen. Fin. Servs., 972 A.2d 882 (Md. App. 2009). 10. Beau Townsend Ford Lincoln, Inc. v. Don Hinds Ford, Inc., Case No. 17-4177 (6th Cir. Nov. 27, 2018) 11. Id. at page 18. 12. Id. at page 15. 22 Nebraska Banker
RkJQdWJsaXNoZXIy ODQxMjUw