The Agency Insider with Linda McGlasson

Dwelling House Failure: A Story of ACH Fraud

Dwelling House Failure: A Story of ACH Fraud

The failure of Dwelling House Savings and Loan illustrates to me what smaller institutions are facing when it comes to securing their data. Savings and Loans, banks and credit unions all have a lot of data to protect and few resources to throw up against the myriad criminals who are lurking outside their institution's perimeter.

The story is a sad one for this storied savings and loan, which was minority owned. It has a long community service history in Pittsburgh, going back more than 100 years. Dwelling House offered home mortgages and business loans to African Americans in the Hill district of Pittsburgh back when other banks were not making loans to them, says CEO John Haines, who joined the bank in December 2008.

What brought the institution to its demise was fraud -- ACH fraud to be specific. A group of "outside criminals" perpetrated false transactions through ACH, totaling more than $3 million, says Haines in a local television interview. Pittsburgh police and the FBI continue to investigate the crime.

Four local foundations in Pittsburgh, as well as DollarBank of Pittsburgh, rallied around the bank and helped raise more than $1 million earlier this June, just prior to a regulatory deadline to raise capital. But unfortunately that was not enough to keep the bank alive.

The sad part is that the community came to the bank's aid, but it wasn't enough.

Keep Dwelling House's story at the top of the list to show your board of directors the next time you're faced with yet another cut to your information security budget. Its story may save your institution from a similar end.

About the Author

Linda McGlasson

Linda McGlasson

Managing Editor

Linda McGlasson is a seasoned writer and editor with 20 years of experience in writing for corporations, business publications and newspapers. She has worked in the Financial Services industry for more than 12 years. Most recently Linda headed information security awareness and training and the Computer Incident Response Team for Securities Industry Automation Corporation (SIAC), a subsidiary of the NYSE Group (NYX). As part of her role she developed infosec policy, developed new awareness testing and led the company's incident response team. In the last two years she's been involved with the Financial Services Information Sharing Analysis Center (FS-ISAC), editing its quarterly member newsletter and identifying speakers for member meetings.

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