Conflicting Rulings Muddy Waters on ACH Fraud

June 20, 2011

A federal court in Michigan has found in favor of Experi-Metal and ruled that Comerica Bank must reimburse the Sterling Heights company $560,000 for fraud losses related to a phishing attack. The ruling contradicts a similar one last week in Maine. In the Experi-Metal case, Judge Patrick Duggan of the U.S. District Court for the Eastern District of Michigan said that the bank should have done a better job of picking up the fraudulent transactions running from the company’s accounts after its financial controller was duped into opening a malware-laden phishing e-mail. Duggan said “a bank dealing fairly with its customers, under these circumstances, would have detected and/or stopped the fraudulent wire activity earlier.” In the ruling in Maine, the presiding magistrate ruled that Ocean Bank was not responsible for the loss of around $345,000 from a business customer account following a similar cyber-attack. With multiple cases of ACH wire fraud piling up in the US, the rulings leave the critical liability issues open to debate.