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At the beginning of August, the U.S. District Court for the Eastern District of Michigan decided that a manufacturer could not recover $800,000 in funds lost after an employee mistakenly wired payment for legitimate vendor invoices into a fraudster’s bank account, after receiving a spoofed email requesting the large payment. The case is Am. Tooling, Inc. v. Travelers Cas. & Sur. Co. of Am., No. 16012198, 201 U.S. Dist. LEXIS 120473 (E.D. Mich. Aug. 1, 2017).

Travelers Casualty And Surety Company of America (Travelers) provided businessowners coverage for the policyholder, American Tooling Center (ATC). ATC is a tool and die manufacturer that outsources some of its work to overseas vendors. In 2015, the treasurer of ATC received a fake email disguised to look like it came from one of its vendors. The domain in the modified email had been changed slightly and directed payment for several legitimate outstanding invoices to a new foreign bank account. Without verifying the bank account information, ATC subsequently authorized payments to a bank account it believed to belong to the true vendor. After the $800,000 payment was wired to the account, ATC learned that the payment was received by fraudsters, and not the vendor they had been intending to pay.

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