Identity Theft is bad enough without getting sued by your bank

January 29, 2010 – 11:24 am

Identity theft is a horrible thing. It’s even worse when that theft gives criminals access to your bank accounts and they withdraw massive amounts of money in your name. But now there’s something even worse than that — when your bank sues over the amount stolen.

That is exactly what happened to a company called Hillary Machinery located in Plano, Texas. After becoming the victims of a group of Romanian and Italian hackers who initiated a series of unauthorized wire transfers, Hillary Machinery had their bank account depleted of $801,495 in funds. Over a two to three day period there were dozens of unauthorized wire transfers made for the account and PlainsCapital, against policy and common sense, satisfied all of them based on good faith. Typically many transactions for high dollar amount raise warning flags with banks that prompt the temporary suspension of accounts until they can verify if the transfers are legitimate or not. The criminals were using the accurate username for the business, but the bank only requires that customers have a username and password from an authorized computer. Days before the attach the bank authorized two new computers for Hillary Machinery — both of which had IP addresses from Italy and Romania.

Now PlainsCapital is suing Hillary Machinery so they don’t have to reimburse the company. So far about $600,000 has been recovered by the bank, but the banks claims that the remaining balance isn’t their responsibility. They claim that their methods were reasonable and secure and therefore they shouldn’t be liable. Whatever the case, PlainsCapital will go down as the first bank to sue a customer due to online identity theft. Surely that won’t be a plaque that they hang on their wall.

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