Each year, conventional, old-fashioned crooks rob banks to the tune of about $50 million. In contrast, every year cybercrooks steal billions of dollars from the bank accounts of small and mid-size companies in Europe and the United States. Why? The reason is that small businesses tend to be lax in protecting themselves from hackers. They keep their accounts in community or regional banks, have only rudimentary security measures, and usually fail to hire an on-site cyber security expert. 

You May Not Receive Compensation for Your Losses Many small-business owners believe that if their bank accounts are hacked and disappear, their banks will reimburse them. That is not always the case, however. Just ask Mark Patterson, the owner of Patco Construction in Stanford, Maryland. He lost more  than $350,000 to cyberthieves. When People’s United Bank would not agree to a settlement, Patterson sued, claiming that the bank should have monitored his account. So far, federal judges have agreed with the bank—that its protections were “commercially reasonable,” which is the only standard that banks have to follow.

Insurance May Not Be the Answer

Similarly, small-business owners often think that their regular insurance policy will cover cyber losses at their local banks. In reality, unless there is a specific “rider” to a business’s insurance policy, its bank accounts are not covered. So, just because your business will be reimbursed if thieves break in and steal your machines and network servers, that does not mean you will be covered if cybercrooks break into your bank account.

Question

1. Meet with your bank managers and discuss what you can do to protect your company’s bank accounts.
2. Have your company sign up for identity-theft services. Many large banks provide these.
3. Change your company’s passwords frequently. Always use long, complicated passwords.
4. Instruct your employees never to reply to unknown e-mail requests, particularly if they ask for any information about the company.
5. Have a computer expert test the firewalls safeguarding your internal computer network.