The Chubb Group of Insurance Companies has launched a new endorsement to help protect community banks from a more than three-fold increase in fraudulent online commercial transactions.
The new endorsement to the ForeFront Security by Chubb Community Bank Bond expands the definition of fraudulent communications. Fidelity bonds, which help indemnify banks against losses resulting from a broad range of dishonest and fraudulent acts, typically require a bank to authenticate customer fund transfer instructions via a telephone callback. Chubb’s new Cyber Fraud Endorsement also allows a bank to authenticate commercial customer instructions through text messaging, email or other methods.
According to the American Bankers Association, the number of account takeover attempts reported at the 100 financial services firms it surveyed increased from 87 in 2009 to 314 in 2011.
“This survey points to an alarming trend that is prompting banks to look for the type of protection afforded by Chubb’s Cyber Fraud Endorsement,” said George Allport, vice president and worldwide fidelity manager for Chubb. “Although regulations may not hold banks responsible for commercial customer’s losses due to fraudulent transfer instructions, businesses frequently sue their bank to make them whole. Chubb’s endorsement helps indemnify community banks from defense costs and direct damages arising out of such a lawsuit.”