Social Engineering Scheme

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Ruling on cross motions for summary judgment, a federal court in New York held that AIG Specialty Insurance Company (AIG) must cover the settlement of an underlying action against its insured, SS&C Technologies Holdings, Inc. (SS&C), who was duped by e-mail scammers to issue millions in wire transfers.  The court rejected AIG’s assertion that the loss resulted from SS&C’s exercise of authority or discretionary control of client funds where SS&C only had limited administrative authority and further held that, even if SS&C had exercised the requisite authority, the exclusion was ambiguous.  A copy of the court’s decision can be found here.
Continue Reading New York Federal Court Says Social Engineering Scheme Covered Under Professional Liability Policy

The Hunton Andrews Kurth insurance recovery team secured a victory for firm client, The Children’s Place (“TCP”), obtaining a ruling from a New Jersey federal court in The Children’s Place, Inc. v. Great Am. Ins. Co., 2019 WL 1857118 (D.N.J. Apr. 25, 2019), in which the court allowed TCP to seek insurance coverage for a “social engineering scheme” that defrauded the company of $967,714.29.
Continue Reading Hunton Insurance Lawyers Secure Win For Socially Engineered Computer Fraud Loss

On April 17, 2018, the Ninth Circuit affirmed a district court decision finding that an exclusion barred coverage for a $700,000 loss resulting from a social engineering scheme. Aqua Star (USA) Corp. v. Travelers Cas. & Surety Co. of Am., No. 16-35614 (9th Cir. Apr. 17, 2018). The scheme involved fraudsters who, while posing as employees, directed other employees to change account information for a customer. The employees changed the account information and sent four payments to the fraudsters.
Continue Reading Ninth Circuit Finds Exclusion Bars Coverage For Social Engineering Scheme