Yesterday, Village View, Inc. reached a settlement with Professional Business Bank, a California state-chartered bank subject to regulation by the Federal Deposit Insurance Corporation (FDIC), over the company’s lawsuit against the bank arising from a data security breach.  In March 2010, Village View lost nearly $400,000 after the company’s bank account was compromised by hackers.  The company brought suit against Professional Business Bank alleging, among other claims, that the bank failed to comply with the Federal Financial Institutions Examination Council’s (FFIEC) authentication guidance from 2005 and other FDIC guidance on identify theft.  Specifically, Village View’s complaint alleged that the bank used only single factor authentication as opposed to multifactor authentication required by the FFIEC guidance.  The company announced that the settlement amount included the full amount of lost funds plus interest from the bank.   

The lawsuit and settlement are noteworthy insofar they underscore the potential significance of the FFIEC guidance, including the FFIEC’s release in 2011 of a supplement to its authentication guidance, to mitigate both regulatory and litigation risk.   

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Photo of Mike Nonaka Mike Nonaka

Michael Nonaka is a partner in the firm’s Financial Institutions practice group. He represents banks and other financial institutions on a wide variety of bank regulatory, enforcement, legislative and policy issues.  Mr. Nonaka also is co-chair of the firm’s Fintech Initiative and works…

Michael Nonaka is a partner in the firm’s Financial Institutions practice group. He represents banks and other financial institutions on a wide variety of bank regulatory, enforcement, legislative and policy issues.  Mr. Nonaka also is co-chair of the firm’s Fintech Initiative and works with a number of banks, lending companies, money transmitters, payments firms, technology companies, and service providers on innovative technologies such as big data, blockchain and related technologies, bitcoin and other virtual currencies, same day payments, and online lending.