Is Your Bank's Security System Adequate?


Statistics regarding payment systems in the United States are by now well-known. Check usage hit all-time highs in the 1990s, but has been on the decline since. Meanwhile, debit card, credit card, and electronic or automated clearing house (ACH) payments have sky-rocketed. Online banking has increased substantially, as customers have become more familiar and more comfortable with it.

Unfortunately, as with any other advance in bank technology, the fraudsters seem to have adapted the fastest to this change. When check fraud became more complicated and less fruitful, the focus turned to electronic payments. The Internet--and the ease with which millions of potential victims could be reached--even brought back an old standard in a new form: so-called "419" or "Nigerian" scams.

The problem for banks has always been the same: taking into account what frauds are fashionable today, what security measures must or should banks take in response? The answer is the same: commercially reasonable procedures, but what does "commercially reasonable" mean? A new case in Texas may shed some light on the subject, and it is certainly worth some attention, no matter how advanced a bank's security procedures are.

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Published In: Consumer Protection Updates, Criminal Law Updates, Finance & Banking Updates, Science, Computers & Technology Updates

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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