Cyberattacks Can Drain Cash From Port Vendors: FBI

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By Brandon Ross

July 20 — Cybersecurity breaches of port operators’ computer systems have resulted in thefts that left vendors unpaid, an FBI official, highlighting gaps in cybersecurity and cyber insurance policies, told Bloomberg BNA.

Hacking is becoming easier, less time-consuming and less expensive, while the cost to stave off software breaches remains high and requires more coordination than ever, Michael Sohn, supervisory special agent of the FBI Los Angeles cyber outreach division, said. He was speaking to seaport stakeholders, including port operators and vendors, at a July 20 cybersecurity seminar held by the American Association of Port Authorities.

Sometimes a port operator doesn't learn that a system has been breached until hearing from a vendor who has not received a payment that was due, Sohn said. Then the port may find that someone has illegally changed the routing number for a vendor’s bank account. The port can ask the bank to reverse the charge, but banks may not do so because the charge was authorized by the port.

The average cost per company affected is $130,000, Sohn told Bloomberg BNA in an interview during the event. “Sometimes we’re able to recover the money, sometimes we’re not,” he said.

Cyber fraud isn't considered a cyberattack, and so insurers don't pay a claim in many cases, Sohn said.

“[I]f there was a scam, a lot of the time insurance won’t cover that because you directed the banks to move money,” he said. When ports give the go-ahead to pay an account, that may disqualify the transaction from being something the bank will reverse.

“So a lot of the times the banks are saying ‘you told us to do it,' and therefore the banks aren’t liable,” he said.

Easy Come, Easy Go

“The ability to deploy cyberattacks has become so easy, whereas the defense against it has become a team sport,” Sohn said during his keynote address for the seminar. Cyber criminals don't even need to have a highly technical background to hack into systems anymore, Sohn said. Rather, they have an abundance of malware choices—many under $50, some as low as $10 or even available for free—with which to hack a system.

When ports turn to their insurers to cover the cost of cyber crimes, they find that courts have decided in favor of underwriters and many of their claims are not paid, Sohn said.

The effects can be devastating for smaller companies, such as many port vendors.

Port vendors can range from terminal operators like Ports America or Amports, to construction companies, trucking companies, and any other entity that accesses port facilities, David Espie, director of security for Maryland Department of Transportation Port Administration told Bloomberg BNA at the event.

“Small businesses literally go under because of this type of fraud,” Sohn told Bloomberg BNA.

Other speakers at the event from the U.S. Coast Guard, Department of Homeland Security and port operators shared a common suggestion for ports to try to combat system breaches: Share data with the government and from port-to-port. This will let the government better identify trends and get the message out to all ports to be on the lookout for certain activities on their systems that could help them cut off some hacks in before criminals can capitalize on them.

To contact the reporter on this story: Brandon Ross in Washington at bross@bna.com

To contact the editor responsible for this story: Heather Rothman at hrothman@bna.com

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