Choice Escrow and Land Title, LLC v. BancorpSouth Bank

Facts

Choice was a company that helped facilitate real estate transactions by holding the buyer’s money in escrow until the sale was finalized. In November 2009, Choice became aware of phishing scam that was being used to acquire the credentials of company employees and contacted Bancorp to discuss what could be done to protect its bank account from such attacks. Choice asked if it was possible to prohibit any wire transfers to foreign banks and Bancorp replied that it was not possible. The Bancorp employee explained the security services offered by the bank, which included password protection, device authentication software referred to as “Passmark”, daily limits on wire transfers (e.g., a $10,000 limit), and a program called “dual control.” Dual control would require another Choice employee to approve any wire transfer, meaning that if one of Choice’s employee’s credentials were stolen, the thief would not be able to initiate a wire transfer without a separate employee’s approval. Choice declined the dual control program, explaining that it would be too inconvenient for their small staff to require two employees to approve every wire transfer. Choice declined to put daily limits on wire transfers as well and so were only protected by the password requirement to access its Bancorp account and the Passmark software’s device recognition feature. On March 17, 2010, a hacker gained access to one of Choice’s employee’s credentials using a phishing scheme and was able to initiate a wire transfer for $440,000 to a foreign bank in the Republic of Cypress. Choice sued Bancorp to recover the lost funds