Even as its chief information security officer was lauded by a trade group, People”™s United Financial Inc. was sued by a Maine construction company that alleged lax security systems allowed cyber-thieves to break into an account it held at a People”™s United subsidiary and make off with $600,000.
Sanford, Maine-based Patco Construction Co. sued Ocean Bank, one of six New England banks People”™s United picked up in its 2008 acquisition of Chittenden Corp.
People”™s United Vice President Tim Callahan was recognized at last month”™s Information Security Executive of the Year Northeast Awards sponsored by the Executive Alliance Inc., in part for making sure that access to highly sensitive customer data was only available to those approved to view it, even as People”™s United added the Chittenden banks to its systems.
Shortly after the Chittenden deal was completed, People”™s United suffered a significant security breach after tapes containing customer information were lost in transit, which People”™s United said was the fault of the company assisting in a sale of stock.
At deadline, People”™s United had yet to respond to the Maine allegations in court. Patco claims Ocean Bank not only failed to notice the thieves draining its business checking account through a series of suspiciously large transactions, it also drew on a $200,000 credit line held by Patco to cover the losses. At the time of the lawsuit, Patco said Ocean Bank was demanding repayment of the funds.
Patco said it has since recovered nearly $250,000 of the funds but did not specify how the bank did so.
Patco cites a number of complaints, saying Ocean Bank”™s policies required Patco employees to enter passwords so often they were essentially exposed to being picked up by infiltrators, and did not use token-based systems to verify the identity of accountholders. It also complained that Ocean Bank”™s $750,000 limit for transfers in its automated clearing house network was needlessly high for a small company that drew less than $40,000 to meet payroll.
