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EFT Guard: Corporate Account Takeover: Fraudulent Transfer of Funds Protection for Commercial Customers
One of the more heated issues in community bank insurance over the past few years is commercial online cash management customer loss of monies that occurs due to an electronic funds transfer that originates through a commercial customer’s own computer system. It’s important to keep in mind that if the hackers gain access to your bank’s computer system and the bank suffers a monetary loss the assumption is the financial institution bond will respond.
But what if the hacker comes through the customer’s system?
The Computer Systems Fraud rider in the FI Bond provides coverage against hacking theft of monies through the bank’s own system, not usually through systems owned by the bank customer. Insurance carriers rate the FI Bond computer crime coverages based on the bank’s system, not the customer’s. If the bank is found legally liable under section 4A of the Uniform Commercial Code, coverage may apply under the Directors and Officer policy Bankers Professional Liability endorsement or the Cyber Liability policy Electronic Funds Transfer Liability endorsement; both cover defense cost settlements or judgements after a customer brings a lawsuit. If the customer is legally liable, they need their own insurance protection for any loss of monies due to fraudulent electronic funds transfer loss.
Due to the potential coverage deficiency, many commercial online cash management customers assume hacking theft of monies that occur through the customer’s system would be covered by the bank. This coverage assumption is in most cases incorrect and creates a perfect environment for negligent lawsuits against banks by commercial online cash management customers that lose monies due to an account takeover.
Many banks are asking their commercial online cash management customers if they carry a commercial crime bond with a computer systems fraud rider that includes an electronic funds transfer endorsement. We highly recommend banks implement this best practice by asking their cash management customers this question and encouraging them to purchase this insurance. Educating cash management customers regarding appropriate insurances to purchase, security protocol and communicating best practices is key.
Midwest Bankers Insurance Services (MBIS), which is owned and operated by the Minnesota Bankers Association and the Wisconsin Bankers Association, has a product solution called EFT Guard which protects the commercial online cash management customer for monetary losses stemming from corporate account takeover, including fraudulent ACH and wire transfers perpetrated through the customer’s system that is outside of the care, custody and control of the bank. A master policy will be issued to the bank and the annual premium is paid by the bank.
EFT Guard product benefits include unique EFT fraud coverage with no application or individual underwriting to commercial online cash management customers, and the premium is based on the selected number of accounts and adjusted at renewal. Included are risk management tools and education through an online portal.
Below are EFT Guard sample rates, contingent on a short application.
Let us know how we can help protect your bank and your commercial customers from fraudulent transfer of funds.
*These rates are quoted for informational purposes only. Actual rates are based on specified number of commercial account holders who are under written contract with the bank to execute Electronic Funds Transfers. The bank’s ACH/EFT internal controls, financial condition and the actual number of account holders may alter final pricing +/-25%.
MBIS is owned and operated by the Minnesota Bankers Association and the Wisconsin Bankers Association, while also being endorsed by the North Dakota Bankers Association. As an insurance agency run by those defending and advocating for banking, you can rest assured MBIS will always have your best interests in mind. Further, as an independent agency, MBIS has access to a variety of insurance providers to help them tailor plans to meet the specific needs of banks. To find out more about how MBIS can be the solution to your insurance challenges, please visit
To learn more about EFT Guard and to request an application, please contact Adam Dawson at 952-857-2604 or
or Jeff Otteson at 608-217-5219 or