Patco Construction. v. People's United Bank hasn't made the mainstream evening news. But it is the top headline in the online banking world, thanks to a recent court decision in the case.
For the first time, a federal Court of Appeals has ruled that a bank's electronic transaction security procedures failed to meet the standard required under the Uniform Commercial Code (UCC) as "commercially reasonable," putting the bank on the hook for losses due to fraud.
Patco, a small property development and contractor in Sanford, Maine, sued People's United for authorizing six fraudulent withdrawals from its account in May 2009, totaling $588,851, even after the bank's security system had flagged each transaction as high-risk. The bank was able to block or recover $243,406 of that total.
http://www.csoonline.com/article/714283/....

A number of facts remain in dispute. The bank claims that it changed the agreement with its commercial customers to require that they monitor their own accounts daily, and if they saw any unauthorized activity, to notify the bank that day. Patco claimed it had never received that notification. The Appeals court remanded that and other disputes back to the District Court.