Dark Reading is part of the Informa Tech Division of Informa PLC

This site is operated by a business or businesses owned by Informa PLC and all copyright resides with them.Informa PLC's registered office is 5 Howick Place, London SW1P 1WG. Registered in England and Wales. Number 8860726.


Small Businesses, Banks Wrestle With Security Issues

Banks frequently fail to detect online fraud before funds are gone, Ponemon study says

If online banking is a blessing for small and midsize businesses, then it could also be a security curse, according to a study published earlier this week.

According to a study conducted by Ponemon Institute and sponsored by Guardian Analytics, SMBs are becoming increasingly frustrated by breaches that occur through the banking system, as well as the banks' inability to detect or rectify them.

In the survey, 55 percent of SMBs reported experiencing fraud in the past 12 months, with 58 percent of fraud enabled by online banking activities. Eighty percent of banks failed to catch fraud before funds were transferred out of their institutions, Ponemon says.

While many small businesses assume banks will restore funds lost in online hacks, the survey paints a different picture. In 87 percent of fraud attacks, the bank was unable to fully recover the lost assets, Ponemon says. Fifty-seven percent of the respondents that have experienced a fraud attack said they were not fully compensated by their banks. Twenty-six percent were not compensated for any part of their losses.

Terry Austin, CEO of Guardian Analytics, says he was surprised by the high volume of SMBs that reported experiencing fraud and by the lack of detection of fraud by the banks.

"We consider that a best practice, and it's not being followed," he says.

The incidence of fraud is affecting the relationship between the banks and their customers, according to the study. Forty percent of SMBs said they moved their banking activities elsewhere after a fraud incident.

Eleven percent of SMBs that have experienced fraud claimed they have terminated their banking relationship following fraud attacks, and an additional 29 percent said they did not fully terminate their relationship, but moved their primary cash management services to another institution.

Such incidents could not only cause a loss of business for the banks, but they also can incur legal costs, Austin observes. He pointed to recent lawsuits in which companies sued their banks for failing to provide compensation, or banks that sued customers for failing to take proper steps to secure their transactions.

"There are no standards for banking customers security as there are for credit-card handlers under PCI," Austin observes. "The [security] roles of the two sides are not well-defined."

Have a comment on this story? Please click "Discuss" below. If you'd like to contact Dark Reading's editors directly, send us a message.

Tim Wilson is Editor in Chief and co-founder of Dark Reading.com, UBM Tech's online community for information security professionals. He is responsible for managing the site, assigning and editing content, and writing breaking news stories. Wilson has been recognized as one ... View Full Bio

Comment  | 
Print  | 
More Insights
Newest First  |  Oldest First  |  Threaded View
Ransomware Is Not the Problem
Adam Shostack, Consultant, Entrepreneur, Technologist, Game Designer,  6/9/2021
How Can I Test the Security of My Home-Office Employees' Routers?
John Bock, Senior Research Scientist,  6/7/2021
New Ransomware Group Claiming Connection to REvil Gang Surfaces
Jai Vijayan, Contributing Writer,  6/10/2021
Register for Dark Reading Newsletters
White Papers
Cartoon Contest
Current Issue
The State of Cybersecurity Incident Response
In this report learn how enterprises are building their incident response teams and processes, how they research potential compromises, how they respond to new breaches, and what tools and processes they use to remediate problems and improve their cyber defenses for the future.
Flash Poll
How Enterprises are Developing Secure Applications
How Enterprises are Developing Secure Applications
Recent breaches of third-party apps are driving many organizations to think harder about the security of their off-the-shelf software as they continue to move left in secure software development practices.
Twitter Feed
Dark Reading - Bug Report
Bug Report
Enterprise Vulnerabilities
From DHS/US-CERT's National Vulnerability Database
PUBLISHED: 2021-06-15
Apache HTTP Server protocol handler for the HTTP/2 protocol checks received request headers against the size limitations as configured for the server and used for the HTTP/1 protocol as well. On violation of these restrictions and HTTP response is sent to the client with a status code indicating why...
PUBLISHED: 2021-06-14
A buffer overflow vulnerability in SonicOS allows a remote attacker to cause a Denial of Service (DoS) by sending a specially crafted request. This vulnerability affects SonicOS Gen5, Gen6, Gen7 platforms, and SonicOSv virtual firewalls.
PUBLISHED: 2021-06-14
magento-scripts contains scripts and configuration used by Create Magento App, a zero-configuration tool-chain which allows one to deploy Magento 2. In versions 1.5.1 and 1.5.2, after changing the function from synchronous to asynchronous there wasn't implemented handler in the start, stop, exec, an...
PUBLISHED: 2021-06-14
net/can/bcm.c in the Linux kernel through 5.12.10 allows local users to obtain sensitive information from kernel stack memory because parts of a data structure are uninitialized.
PUBLISHED: 2021-06-14
Cross-site Scripting (XSS) vulnerability in the main dashboard of Ellipse APM versions allows an authenticated user or integrated application to inject malicious data into the application that can then be executed in a victim’s browser. This issue affects: Hitachi ABB Power Grids ...