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FDIC Insurance Apply to Cyber Crime Loss of Funds?

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Question: 
I had a customer ask if FDIC insurance coverage would apply to Cyber Crime loss of funds. Thoughts?
Answer: 

Absolutely not. FDIC coverage only protects customers in the event of the bank's failure. Consumers are protected from losses related to unuahtorized electronic funds transfers by Regulation E. However, commercial customers' liability will be determined by the agreement between the institution and the client. The have been many instances where the commercial customer ultimately takes the bank to court in an effort to recover lost funds. Make sure your front line staff is properly trained on the purpose of FDIC insurance as the bank could be held liabile for customer losses if an associate misrepresents someone's coverage.

First published on BankersOnline.com 5/6/13

First published on 05/06/2013

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