Choice Escrow and Land Title, LLC v. BancorpSouth Bank
United States Court of Appeals for the Eighth Circuit
754 F.3d 611 (8th Cir. 2014)
Choice Escrow (plaintiff) declined BancorpSouth's (defendant) available dual-control security option requiring two-user approval for transactions, instead relying only on username/password and device authentication; a third party hacked Choice's account and ordered a fraudulent $440,000 wire transfer, which BancorpSouth processed, and Choice sued to recover the loss. The district court granted BancorpSouth summary judgment, and Choice appealed.
Whether an institutional banking customer bears the risk of loss for a fraudulent wire transfer when the bank employed a commercially reasonable security procedure and accepted the payment order in good faith, even where the customer declined an available additional security measure.