Bank Negligence, Embezzlement, Fraud & Cyber-Hacking

We represent clients who have lost bank account funds due to bank negligence. Our attorneys advise and assist individuals and businesses in making claims against banks to recover lost funds. Banks are required to protect account holders from theft and fraud. When they fail, they may be liable for the financial losses, and victims of stolen funds have three years to file suit against the bank.

The Uniform Commercial Code

Under the Uniform Commercial Code, banks are required to act in a commercially reasonable manner in the opening and maintenance of bank accounts. Unfortunately, that is not always the case. In fact, billions of dollars are lost each year to employee embezzlers, conspirators, fraudsters, thieves and hackers, who steal account information and circumnavigate the bank’s policies, procedures and online fraud prevention efforts. When bank employees and tellers fail to follow standard banking policies, they contribute to the ease in which criminals steal account holders’ funds.

Losses, Embezzlement & Cyber-Hacking

Individuals and businesses can suffer significant losses because banks fail to follow their own policies and procedures in preventing theft and fraud. Victims often lose funds through unauthorized ACH transfers, fraudulent checks with improper endorsements, unauthorized bank withdrawals, unauthorized wire transfers and fraudulent checks with forged maker signatures.

Businesses are very susceptible to bank account losses through employee embezzlement or simply cyber hackers who find ways to access online business bank accounts. In order to embezzle from business accounts, an employee needs very little of the company’s financial information. Embezzlement has become commonplace in business, as employees with easy access to account and financial information are making fraudulent transfers or writing fraudulent checks that result in huge losses for businesses. Cyber hackers find ways to access bank account information through company computers that are vulnerable to cyber attack.

Commercial & Personal Accounts

Potomac Legal Group pursues claims on behalf of individual account holders and businesses who have suffered losses due to bank negligence. 

It is important to monitor your bank account balances and activity. Report fraud immediately. 

The amount of time that passes between a loss and your reporting of the loss is important. The policies that you agree to upon opening an account, as well as the Uniform Commercial Code, will govern your ability to pursue claims. If you wait too long, you may lose your ability to pursue claims for losses.

Your bank or financial institution has a fraud reporting number, as well as a mailing and email address. Notify the bank by phone and in writing immediately upon discovering potential losses or fraud.

Next, contact Potomac Legal Group to schedule a consultation to discuss your matter.

Bank Negligence: ACH & Wire Transfers

Section 4A of the Uniform Commercial Code (U.C.C.) governs claims of bank negligence related to electronic and wire transfers. A bank may be responsible for an unauthorized transfer if it fails to follow the agreed-upon security procedure for verifying the authenticity of the transfer order or if the security procedure itself is not commercially reasonable. U.C.C. § 4A-201.

Generally, if a bank follows a commercially reasonable security procedure and acts in good faith in accepting the payment order, the order received by the bank is “effective as the order of the customer, whether or not authorized.” See U.C.C. § 4A-202(b). 

The U.C.C. defines security procedure as “a procedure established by agreement of a customer and a receiving bank for the purpose of verifying that a payment order or communication is that of the customer, or detecting error in the transmission or content of the payment order or communication.” See § 4A-201.

Each state has adopted its own version of the U.C.C., which allows plaintiffs to bring claims against a bank in state court.

Security Procedures & Unauthorized Access

If a bank fails to follow the agreed security procedure or acts with gross negligence, it may be held liable for the loss.

The U.C.C. does not provide specific requirements for security procedures, but it does require that the procedures be commercially reasonable. “Commercial reasonableness of a security procedure is a question of law to be determined by considering the wishes of the customer expressed to the bank, the circumstances of the customer known to the bank, including the size, type, and frequency of payment orders normally issued by the customer to the bank, alternative security procedures offered to the customer, and security procedures in general use by customers and receiving banks similarly situated.” See § 4A-202(c). 

A security procedure may be considered commercially reasonable if:

  • The security procedure was chosen by the customer after the bank offered, and the customer refused, a security procedure that was commercially reasonable for that customer, and
  • The customer expressly agreed in writing to be bound by any payment order, whether or not authorized, issued in its name and accepted by the bank in compliance with the security procedure chosen by the customer.

If a receiving bank accepts an unauthorized and ineffective payment, then the receiving bank shall “refund any payment of the payment order received from the customer to the extent the bank is not entitled to enforce payment and shall pay interest on the refundable amount calculated from the date the bank received payment to the date of the refund.” See U.C.C. § 4A-204(a). 

The customer is not entitled to interest if the customer failed to notify the bank within 90 days after receiving notification that the unauthorized order was accepted.

Uniform Commercial Code: Protecting Account Holders

The U.C.C. does not differentiate between checking and savings accounts and other types of accounts when it comes to a bank’s liability for unauthorized funds transfers.

The U.C.C. defines a “funds transfer” as the “series of transactions, beginning with the originator’s payment order, made for the purpose of making payment to the beneficiary of the order.” See §U.C.C. 4A-104(a). 

For example, this definition would encompass various types of accounts such as Certificate of Deposit accounts, as well as checking or savings accounts, as these types of accounts may receive or send funds from one party to another.

Additionally, U.C.C. §4A-102 specifically states that §4A applies to “any funds transfer that is conducted by a financial institution.” This broad language indicates that the provisions of §4A, including those related to a bank’s liability for unauthorized funds transfers, apply to all types of bank accounts.

Recovering Damages

Our bank negligence team is highly experienced in resolving cases and recovering damages. We have experience working in multiple jurisdictions against regional and nationwide banks.

Contact Us Today to Discuss Your Matter

Bank Negligence Legal Services

  • Fraud & Misrepresentation
  • Bank Negligence Litigation
  • Unauthorized Transactions
  • Cyber hacking
  • Uniform Commercial Code Violations
  • Fraudulent Checks
  • Unauthorized ACH Transfers