Banking Law

In the last analysis, the individual person is responsible for living his own life and for "finding himself." If he persists in shifting his responsibility to somebody else, he fails to find out the meaning of his own existence.
---Thomas Merton

Observations like that are one of many reasons Merton was considered a mystic. In an age populated with the professionally aggrieved and perpetually entitled, taking responsibility for your own screw ups, much less your own life, is an esoteric notion.

Yesterday, when I read The Fraud Blog's Tracy Kitten's latest post on bank account security breaches, the complaints of the unnamed community banker rang true on a couple of major points. They echoed what I've been hearing from bank security officers officers over the past several years, in response to some high profile cases where cybercrooks have penetrated a bank business customer's IT system and used keylogging malware to steal user names and passwords, which in turn are used by the crooks to gain access to the customer's bank accounts online and transmit a lot of money from the customer's bank accounts to the crooks.

"I absolutely believe that it's fair to ask commercial customers to ensure security of their transactions outside the bank's portal," this banker tells me. "I feel like the bank ought to take responsibility if there's any intrusion into the bank's system that impacts our customers. But I feel like the customer is responsible for everything outside the system of the bank."

[...]

"I'm not sure there is a way to protect a customer," he adds, "if their actions put their network at risk."

It's not merely that bankers "feel" the customer ought to be responsible when its own ignorance of proper information technology and/or online security is the direct cause of the criminals gaining access to the keys to the magic kingdom. Most banks have (or should have) online banking agreements with their customers that specifically make the customer responsible for any such losses and hold the bank harmless from the same.

Here's the second point which struck me as completely consistent with my own experiences and conversations with bankers: no matter how strong the bank's legal position might be vis-a-vis a customer's claim, from the standpoint of adverse public relations and the cost of dreaded trial lawyers and related expenses, the bank often decides to settle.

The bank's president, who asked to remain anonymous, says the institution decided to settle this case to save the legal expense of a lengthy trial.

Many customers apparently have a mindset that it's entirely the responsibility of the bank to protect the customer from the customer's own stupidity. The customer uses the same computer to do its online banking that it employs to surf internet porn sites and/or click on links contained in those unsolicited, yet strangely provocative, e-mails from that hot Russian babe, "Yulia," who's just dying to show you her assets on a live web cam if you'll just click on the link. As a customer's lawyer told a reporter in a case in Texas last year, his client expects that when you put cash in the bank and a bank robber steals it, the bank makes the customer whole, so why should this situation be any different? The fact that the customer dropped his keys to the front door of the bank and to the specific vault within the bank that contains his money on the sidewalk in front of a felon, well, those facts won't stop a trial lawyer with chutzpah and the ability to keep a straight face from costing the bank a load of adverse tale-spinning in the public media and a boatload of painful billing by the bank's defense counsel. Thus, like the bank in Ms. Kitten's post, many banks will eventually settle.

And the only people who come out whole are the lawyers for both sides.

Once again dear readers, is this a great country, or what?