Rutan Partner Lisa Neal was quoted in Allison Grande’s article on Cybersecurity & Privacy Predictions For 2018 in Law360 on January 1, 2018. The article focused on some of the biggest privacy and cybersecurity issues in the coming year including data breaches, security risks related to IoT, global privacy law and cyber security insurance.
Neal commenting on insurance coverage related to computer fraud said “there is still an open issue as to whether business email compromise, also known as social engineering fraud, is covered by a company’s computer fraud policy.”
Neal noted that two courts recently reached opposite holdings on this topic with the Southern District of New York holding in July that a computer fraud policy did cover a claim arising out of a hacker’s use of email to trick Medidata employees into wiring $4.8 million overseas, while a Michigan district court reached the exact opposite conclusion in an August decision that held the exchange of emails where a fraudster posed as a vendor to convince American Tooling Center to send payments did not directly cause the transfer of the funds and therefore could not be covered.
“The appeals will likely take a year or more to resolve,” Neal said. “In the meantime, policyholders should closely scrutinize their existing cyber and commercial crime policies to ensure they have adequate coverage for loss caused by email scams.”
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