Franz Hultgren Evenson, Attorneys at Law

Unauthorized Transfer of Funds: Who’s Bears the Burden of Loss?

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The Eighth Circuit Court of Appeals recently announced an interesting decision regarding cyber security and who should bear the loss for a bank’s unauthorized funds transfer. In Choice Escrow & Land Title v. BancorpSouth Bank, the Eighth Circuit evaluated the commercial reasonableness of the bank’s security procedures, and determined the bank’s commercial customer—not the bank—bore the burden for the loss of $440,000.00 resulting from an unauthorized funds transfer involving a breach in the customer’s cyber security. In affirming the United States District Court for the Western District of Missouri, the Court held that the bank had acted in good faith in accepting and executing the fraudulent payment request, the bank’s security procedures were commercially reasonable, and therefore, it had complied with Article 4A of the Uniform Commercial Code to properly shift the risk of loss onto the customer.

A complete copy of the Court’s opinion is available through the Eighth Circuit’s website.


Drew Hultgren
Neil Franz
Joann Evenson
Joann Evenson
JoAnn Evenson
Chris Jensen
Aaron Decker
Sarah Jewell