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Hackers Steal Half a Million Dollars Using Direct Deposit

by Terrence O'Brien on September 25, 2009 at 04:01 PM

We always say that the best defense against cyber-security threats is a little due diligence. If you watch out for warning signs, most major breaches are avoidable. That advice applies not only to individual PC users, but to businesses, as well, and to banks, most importantly. Unfortunately, just like regular users, many banks and businesses fail to carefully guard their systems.

Hackers used this lack of careful observation to their advantage when they withdrew $588,000 in one week from the account of a small, family-owned, construction company called Patco. According to the New York Times, the cash was withdrawn from an account with People's United Bank, or Ocean Bank of Delaware, that was reserved for payroll purposes. The hackers exploited the ACH (Automated Clearing House) Network, which is used for direct deposits, to make faulty payments to accounts, causing the bank to draw on Patco's line of credit to cover the $223,237 in overdrafts.

The bank was able to recover some of the stolen cash, but is holding Patco responsible for the $345,444 it was unable to recover. The construction company has responded by suing Ocean Bank for failing to notice the warning signs -- namely the unusually large amount of withdrawals and the fact that the cash was taken out during the middle of the week instead of Friday when Patco usually pays its employees.

It's not clear how exactly the thieves infiltrated the account, and there appears to be no evidence of any forceful access. Instead, it's believed that the scammers obtained security info (usernames, passwords, security questions) through either spyware or use of social engineering, such as posing as a bank representative or as customer support via phone or e-mail.

This just stresses the importance of improving our financial institutions' cyber-security systems, which seem to constantly remain one step behind the world's electronic criminals. [From: NY Times]

Tags: bank, crime, hackers, scam, security, top

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