Most business owners are unaware that if a cyber thief breaks into their business bank account the bank is not likely responsible for the loss, as the FDIC nor any other government agency yet requires it. This has become a billion dollar and growing problem.
This means that if a hacker gains access to one of these accounts — whether it is the account owner’s fault or not — the bank isn’t liable. For a small business, such an event can, and likely will, be devastating. In fact, 60 percent of small companies go out of business within six months of cyber theft, according to a congressional subcommittee.
When a bank does replenish some of the funds lost, there typically is a significant waiting period. During that time, all accounts and money are frozen, rendering a business owner unable to write or cash checks and pay vendors or employees. In many cases the businesses checks bounce and the business owner is responsible for to its vendors for bad check fees. The longer the wait time, the greater the chance the business suffers insurmountable damage.
Once Marc Kramer, a serial entrepreneur, professor at Drexel University and local Angel Venture Fair organizer, learned about this, he teamed up with Dick Peterson, a former insurance brokerage firm executive, to found Commercial Deposit Insurance Agency (CDIA).
The company offers insurance for small business bank accounts up from $10,000 to $50,000 for only $100 to $178 a year respectively, and the policies are provided by a accredited insurance company and financial services giant XL Group P.L.C.
With commercial deposit insurance, if your account is hacked by cyber thieves and money is stolen, the goal is to have your money replaced fully and swiftly. There is no need to worry if you can pay vendors or employees.
“Here’s what I heard from banks,” Kramer told the Inquirer last week. “If it’s a few thousand dollars, we’ll cover it. If it’s $10,000, we’ll split it. After that, they’re on their own, because we don’t have an obligation to fix it.”
Now it can be unnecessary to live in fear of cyber thieves, but knowledge and preparation are crucial to ensuring that your business and money are secure.-30-
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