Privacy Rumblings Grow Louder: Prompted by Recent Publicity over Data Breaches, Congress, State Houses, and, Increasingly, the Courts Are Considering Cases and Proposals That Could Impact Banks

By Cocheo, Steve | ABA Banking Journal, June 2005 | Go to article overview

Privacy Rumblings Grow Louder: Prompted by Recent Publicity over Data Breaches, Congress, State Houses, and, Increasingly, the Courts Are Considering Cases and Proposals That Could Impact Banks


Cocheo, Steve, ABA Banking Journal


If you already have trouble sleeping at night, don't read any further. Not to minimize anything going on in Congress or the statehouse, but a pending state lawsuit concerning customer data has drawn little banking industry press and yet poses the risk of setting some awful precedents in the areas of identity theft, data breaches, and privacy law violations.

The case is considered a test of the relative responsibilities between banks and their customers over ensuring the security of online financial transactions and it is believed to be the first case of a customer suing their bank over cyber crime losses. While the case involves only one firm thus far, the plaintiff's attorney has been quoted as hoping to turn the matter into a class action suit.

Officially known as Ahlo, Inc. vs. Bank of America, N.A., the case, filed Feb. 3 with the 11th Judicial Circuit of Florida, Miami-Dade County, draws its colloquial name--the "Lopez case"--from that of the owner of Ahlo, Joe Lopez. Ahlo is a small supplier of business goods. The case had not gone to trial as of mid-May, but the two sides had already been trading motions and BofA had already moved to dismiss the civil suit.

This is Lopez' case, in a nutshell. He alleges that an unknown third party infiltrated the company's computer and initiated an unauthorized wire transfer for $90,348.65, and that the beneficiary bank, Parex Bank, in Latvia, refuses to return the money to Ahlo. Some has already been withdrawn and the rest is frozen.

Here's where the bank comes in. Ahlo blames the bank for allowing the wire to be sent, for failing to recall the wire, and for not reimbursing Ahlo. The firm charges the bank with breach of contract, breach of good faith, and more, including fraud.

Getting to particulars

The cause of the breach of Ahlo's accounts, according to the firm's case, was a computer virus called Coreflood, which it claims the bank should have warned it about. In a extended legal argument for dismissal, the bank stated that: "Ahlo alleges that the Bank owed a fiduciary duty to advise Ahlo that on-line accounts are subject to exploitations by computer viruses. However, superior knowledge alone is insufficient to transform a banking relationship into a fiduciary relationship.... Moreover, the Plaintiff does not allege that Bank of America promised to protect the Plaintiff's computer from viruses. Indeed, there is no allegation that Bank of America allowed its own system to be compromised."

The bank declines to comment specifically on the case because of customer confidentiality. However, a spokeswoman did state that, "Safeguarding information is a priority for Bank of America. Completion of wire transfer transactions requires multiple levels of security to initiate and complete. Our internal review of the transaction in question determined that all of the required account and personal information required to complete the transaction was provided and all appropriate security steps took place within our systems."

Symantec Corp.'s website defines Coreflood as a trojan horse virus. It has been known of since late 2002, according to the site, and though it is frequently used to initiate denial of service attacks, it allows a hacker to gain unauthorized access to an infected computer. Reportedly, the virus was detected when the Secret Service analyzed Ahlo's machine for infiltration. However, reports indicate that the Secret Service has not determined that the virus caused the loss.

The case has been the source of a furious debate on the internet between IT experts and other parties. However, in a commentary posted on the website FindLaw for Corporate Counsel, Anita Ramasastry, Associate Professor at the University of Washington School of Law and a director of the Shidler Center for Law, Commerce & Technology, wrote an analysis of the case. If the bank loses it, she wrote, one could envision a massive duty to advise online banking clients of every potential risk posed by hackers and other internet fraud, potentially even including remedial steps. …

The rest of this article is only available to active members of Questia

Already a member? Log in now.

Notes for this article

Add a new note
If you are trying to select text to create highlights or citations, remember that you must now click or tap on the first word, and then click or tap on the last word.
One moment ...
Default project is now your active project.
Project items

Items saved from this article

This article has been saved
Highlights (0)
Some of your highlights are legacy items.

Highlights saved before July 30, 2012 will not be displayed on their respective source pages.

You can easily re-create the highlights by opening the book page or article, selecting the text, and clicking “Highlight.”

Citations (0)
Some of your citations are legacy items.

Any citation created before July 30, 2012 will labeled as a “Cited page.” New citations will be saved as cited passages, pages or articles.

We also added the ability to view new citations from your projects or the book or article where you created them.

Notes (0)
Bookmarks (0)

You have no saved items from this article

Project items include:
  • Saved book/article
  • Highlights
  • Quotes/citations
  • Notes
  • Bookmarks
Notes
Cite this article

Cited article

Style
Citations are available only to our active members.
Buy instant access to cite pages or passages in MLA, APA and Chicago citation styles.

(Einhorn, 1992, p. 25)

(Einhorn 25)

1. Lois J. Einhorn, Abraham Lincoln, the Orator: Penetrating the Lincoln Legend (Westport, CT: Greenwood Press, 1992), 25, http://www.questia.com/read/27419298.

Cited article

Privacy Rumblings Grow Louder: Prompted by Recent Publicity over Data Breaches, Congress, State Houses, and, Increasingly, the Courts Are Considering Cases and Proposals That Could Impact Banks
Settings

Settings

Typeface
Text size Smaller Larger Reset View mode
Search within

Search within this article

Look up

Look up a word

  • Dictionary
  • Thesaurus
Please submit a word or phrase above.
Print this page

Print this page

Why can't I print more than one page at a time?

Help
Full screen

matching results for page

    Questia reader help

    How to highlight and cite specific passages

    1. Click or tap the first word you want to select.
    2. Click or tap the last word you want to select, and you’ll see everything in between get selected.
    3. You’ll then get a menu of options like creating a highlight or a citation from that passage of text.

    OK, got it!

    Cited passage

    Style
    Citations are available only to our active members.
    Buy instant access to cite pages or passages in MLA, APA and Chicago citation styles.

    "Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences." (Einhorn, 1992, p. 25).

    "Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences." (Einhorn 25)

    "Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences."1

    1. Lois J. Einhorn, Abraham Lincoln, the Orator: Penetrating the Lincoln Legend (Westport, CT: Greenwood Press, 1992), 25, http://www.questia.com/read/27419298.

    Cited passage

    Thanks for trying Questia!

    Please continue trying out our research tools, but please note, full functionality is available only to our active members.

    Your work will be lost once you leave this Web page.

    Buy instant access to save your work.

    Already a member? Log in now.

    Author Advanced search

    Oops!

    An unknown error has occurred. Please click the button below to reload the page. If the problem persists, please try again in a little while.