Premier Flooring Retailer Premier Flooring Retailer Magazine - Covid-19 Busi | Page 18

What to Do in Case of ACH Fraud.
If you find your business a victim of ACH fraud, your first step is to contact the bank
and report the fraud. Your business should also work with the bank to recover the
stolen funds. The bank must institute commercially reasonable antifraud procedures
and any of the procedures the bank agreed to implement, like an ACH block. If the
bank failed to implement or follow the agreed antifraud procedures, they may be
responsible for the entire amount stolen from your business account.
You may have an argument that the bank’s procedures were inadequate. For
example, a construction company had $588,851 of fraudulent ACH transfers taken
from its account that it ultimately was able to recover. Patco Construction Co. v.
People’s United Bank, 684 F.3d 197 (1st Cir. 2012). Initially, the construction com-
pany with its bank’s help was able to recover $243,406 of the stolen funds, leaving
a net loss of $345,444. The company sued the bank to recover that loss. The crucial
issue on appeal was whether the bank’s security system was commercially reasonable.
The court found several flaws in the way the bank implemented its security system.
Although the court also found the construction company did not implement its own
adequate security measures, the bank ultimately agreed to pay the full $345,444 plus
interest. Accordingly, if you find yourself a victim of ACH fraud, work with you bank
to try and recover the money, and to ensure each party pays its fair share of any loss.
If you find your
business a
victim of ACH
fraud, your
Conclusion
first step is to
The bottom line is that every business should check its account every day to ensure
contact the
bank and report that there is not suspicious activity. The other suggested measures will provide sig-
nificant safeguard, but a daily check of your business still provides one of the best
the fraud. Your
ways to avoid being a victim of ACH fraud. It is also recommended that you consult
business should with competent legal counsel and accountants to ensure that your business is taking
all appropriate steps to protect itself from fraud. ❚
also work with
the bank to
Notice: The information contained in this article is abridged from legislation, court
recover the
decisions, and administrative rulings and should not be construed as legal advice or
stolen funds.
opinion and is not a substitute for the advice of counsel.
16 Premier Flooring Retailer | Q1 2020