In a previous post, I wrote how small businesses are being scammed by European cyber-hackers. In a related story, Computerworld reports how Pacto Construction Co. in Portland, ME is suing Ocean Bank of Delaware because the company lost hundreds of thousands of dollars due to allegedly weak security on the part of Ocean’s online banking system.
The main alleged weakness is the lack of two-factor authentication by Ocean Bank. While I am not sure that this places all of the blame in Ocean’s hands, and I think that Patco should be at least partially responsible for their losses if it is found that their own systems were compromised, a victory by the plaintiff in this case could set an interesting precedent to financial institutions who have not implemented strong authentication mechanisms in their online services. Banks and credit unions – take note! However, a victory by the defendant will likely send a very different signal, more to the tune of “If you bank online, you take your chances.” Small businesses and individuals – take note!
This week’s Data Security Podcast also has an excellent interview with the attorney who filed the suit on behalf of Patco.