Prevention is Key to Escalating Costs for Banks and Customers…

Did you see this lesson learned involving a bank and their customer?  

We all know that famous quote from Benjamin Franklin – “An ounce of prevention is worth a pound of cure”….but knowing it and implementing it are two entirely different efforts.  

I hope financial institution and business leaders are paying attention and realizing that COSTS related to implementing prevention are a whole lot less expensive than COSTS related to reaction and damage control? 

What if PlainsCapital and Hillary Machinery had invested more in individual level awareness and tools that could have prevented this string of events?

• Cyber criminals transferred more than $800,000 out of Hillary Machinery’s bank account via ACH and wire transfers.
• Hillary Machinery and PlainsCapital bank were able to recover about $600,000 of the funds that were sent to eastern Europe.
• Hillary Machinery asked PlainsCapital to repay the remaining $229,000.
• PlainsCapital responded by filing a lawsuit against Hillary Machinery asking the judge to declare the bank’s security measures “reasonable”.
• Hillary Machinery filed a countersuit that charged that the bank did not catch the irregular wire transfers and ACH transactions made to Europe over a weekend.
• Hillary Machinery moved their business accounts to a different bank.
• PlainsCapital settled its lawsuit against Hillary Machinery. 

Hillary Machinery is saying nothing and PlainsCapital is saying nothing.

Bottom line…the COSTS to both organizations were significant.  When you add up the COSTS for legal fees and reputation management related to negative headlines along with each organization’s time, resources, marketing, damage control and lost business…you see that prevention would have been much less expensive.

Is your financial institution prepared to prevent this type of incident?  Are customers prepared to do their part in preventing this type of incident?  Are business leaders prepared to prevent sophisticated cyber attacks and risks?

One last thing…don’t you wonder what the settlement details were?