Woodhill is now pushing for a federal law that would require regional and community banks to warn their commercial clients explicitly of the dangers of cyber fraud. He's hired former Louisiana congressman Billy Tauzin, a Democrat turned Republican who chaired the House Energy & Commerce committee, to represent him.
Bank Opposition
The American Banking Association has opposed attempts to extend cyberfraud protection from depositors to small-business clients. Until recently, the association's position has prevailed.
Then came the Experi-Metal lawsuit brought by Valiena Allison against Dallas-based Comerica. In June, U.S. District Judge Patrick J. Duggan ruled in Detroit in favor of Allison and Experi-Metal, agreeing Comerica's response to the fraud didn't meet standards of good faith and fair dealing. Comerica agreed to pay Allison almost the entire amount stolen.
Other cybercrime victims have taken note of this precedent, said Brian Krebs, who has written about the Little & King case and other cyberthefts on his blog (www.krebsonsecurity.com).
Village View, an escrow company based in Redondo Beach, California, that was robbed of $465,558 by cyberthieves in March of 2010, sued Professional Business Bank just two weeks after the Experi-Metal decision.
Bank Attitudes
The last thing community banks want is to be at odds with their clients, said Doug Johnson, a senior policy analyst for the American Bankers Association.
"Banks don't like to sue their customers and customers don't like to sue their banks," he said. "When disputes occur, it's best to try to work together for an appropriate result."
Woodhill said the banking industry is behind the curve on this matter, just as it was in 1978 when it opposed the Electronic Funds Transfer Act, which protects consumer bank deposits from fraud.
"That's one of the biggest favors Congress ever did for banks, even though they were against it," he said. "Banks truly do not understand what their own interests are. Corporate lobbyists only play defense."