BEC Scam

Insurance Coverage Dispute Over Fraudulent E-mail Scam Heard by Ninth Circuit

Data Privacy Word Cloud Insurance Coverage Dispute Over Fraudulent E-mail Scam Heard by Ninth Circuit

Insurance coverage for “Business Email Compromise” (BEC) scams is a hot issue being litigated by companies and their insurance providers in jurisdictions across the country. The Ninth Circuit is poised to issue what may be an influential decision after hearing oral argument this week in a coverage action initiated by an accounting firm that lost its client’s money to a BEC scam.  Learn more from Orrick attorneys Darren Teshima and Harry Moren at our sister blog, Policyholder Insider.

Does Your Insurance Cover Phishing Attacks and Business Email Compromise? The Uncertainty Continues…

Vendor-Impersonation E-mail Scam Illustration of Two Computers Facilitating Online Money Transfer

The coverage landscape for “Business E-mail Compromise” (BEC) scams remains somewhat tenuous, as organizations and carriers continue to battle in court over the extent of coverage. Although recent positive, policyholder-friendly trends in the Eighth Circuit (hacker who took over a bank’s computer system) and federal district court in Georgia (scheme based on spoofing a CEO’s e-mail) found insurance coverage for fraudulently transferred funds, a recent unpublished Fifth Circuit opinion moves in the other direction.  Unfortunately, this new ruling—and the uncertainty it creates—may embolden insurers in fighting coverage for these scams under crime insurance policies.

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Important Ruling for Policyholders Victimized by Business Email Compromise (BEC) Scams

“Business Email Compromise” (BEC) scams are becoming an increasingly prevalent concern for businesses—the FBI reports that incidents have increased 1,300% since January 2015. A federal district court in Georgia recently ruled that a BEC scam in which a fraudster deceived an employee into wiring $1.72 million to an account in China was covered a under a commercial crime policy. The court rejected the insurer’s argument that the wire transfer was not directly caused by the BEC scam, and determined that the policy language was ambiguous about whether intervening events affected coverage, thus resolving the ambiguity in favor of the policyholder. At our sister blog Policyholder Insider, Darren Teshima and Harry Moren discuss why this ruling is good news for policyholders who have fallen victim to a BEC scam.