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Security Breach Impacting 2.5 Million Users Revealed by Mortgage Servicer

 

In October, Lakeview Loan Servicing revealed a significant data breach that went unnoticed for more than a month and exposed the personal details of above 2 million customers. Any incident that leads to unauthorized access to data, applications, networks, or devices is referred to as a security breach. As a result, information is accessed without permission. It usually happens when an invader can get past security measures. 

The breach that was discovered in early December, harmed 2,537,261 borrowers between Oct. 27, 2021, and Dec. 7, 2021, as per the firm. According to public notice The letters, an unauthorized person gained access to the firm's servers and data, including names, addresses, loan information, and Social Security numbers. One of the notices described the occurrence as an "external system breach."

Mortgage servicers receive mortgage payments from homeowners and remit them to investors, tax officials, and insurers via escrow accounts. Investors' assets in mortgaged properties are also protected by servicers, who ensure the homeowners have enough insurance coverage. Customers have lodged eight class-action lawsuits in a Florida federal court since the servicer's revelation in mid-March, alleging Lakeview of breach of fiduciary responsibility, among other things, for failing to preserve personally identifiable information. In a complaint filed on behalf of Jennifer Morrill, a California client, Daniel Rosenthal, an advocate with DBR Law, P.A., said, "This PII was exposed due to Defendant's negligent, reckless, and willful acts and failures and the fails to secure the PII of Plaintiff and Class Members." 

According to Morrill's lawsuit, the sum at risk surpasses $5 million, and the proposed class has more than 100 members. In Morrill's case, a filing on Friday asks that the court cases be consolidated, pending a judge's consent. On Monday, Rosenthal declined to speak on the lawsuit. Lakeview refused to respond to the claims in a statement but said it contacted the proper third parties and people after discovering the incident. "Lakeview, like many other firms, encountered a security incident in 2021," according to the statement. "Steps were taken to contain the problem right once, law enforcement was alerted, and a forensic investigation firm conducted a comprehensive investigation." The operations of Lakeview were not hampered." 

According to a public document with the State Attorney General's Office made by an outside counsel for the firm, the servicer didn't witness a breach in the previous 12 months. Affected consumers received a free year of Kroll free credit and identity theft protection from Lakeview. The news comes amid an increase in fraud risk for mortgage lenders, who are more vulnerable to cyber attacks than other financial institutions. According to a new FundingShield Q1 2022 study, one out of every three transactions involves components of wire or title fraud risk, and wire errors and instances of perpetuated fraud are increased in about 6% of transactions. 

"Keep in mind," warned Ike Suri, chairman, and CEO of FundingShield, a loan and title fraud protection service. "And when it comes to these percentages, we're talking big figures." As per Security experts, the percentage of visitors affected by the Lakeview breach, as well as the volume of information exposed, was substantial. "It's a lot of data which will have repercussions on those people's current business and ongoing relationships, as well as the business itself," Suri said.

The operating assets to a mortgage loan are owned by Lakeview. They work with several Servicing companies to process payments, manage a trust, as well as provide customer support for their current mortgage. 

Morgan Stanley to Pay $60M to Resolve Data Security Lawsuit

 

Morgan Stanley agreed to pay $60 million in a preliminary settlement of a class-action lawsuit filed against the company on Friday, according to Reuters, for allegedly neglecting to secure customers' personal data before retiring outdated information technology. 

The settlement offer awaits the approval of New York District Judge Analisa Torres. The lawsuit was filed on behalf of around 15 million Morgan Stanley clients in response to two separate occurrences that occurred in 2016 and 2019. 

Morgan Stanley decommissioned two wealth management data centres in the first incident. Before removing the unencrypted computer equipment from the centres, the bank's vendor, Triple Crown, was tasked with deleting or destroying it. Even after it had left the vendor's control, this device was later discovered to contain data. According to Morgan Stanley, the vendor removed the devices and resold them to a third party without permission. 

As part of a hardware refresh programme, the second incident entailed the replacement and removal of branch office equipment. The bank was unable to discover some of these devices, which could have retained previously deleted information on discs in an unencrypted version due to a software error. 

Customers will receive a minimum of two years of fraud insurance coverage as part of the proposed settlement, as well as compensation for up to $10,000 in related out-of-pocket losses. The bank also stated that it would improve its data security procedures. 

Morgan Stanley maintains that there was no wrongdoing on its part, even though it is seeking a settlement. In a move to dismiss the complaint filed in August 2021, the bank said that despite extensive investigations and ongoing surveillance over the years, it has not discovered a single instance of data misuse generated from any of its own sources. Morgan Stanley was fined $60 million in civil penalties in October 2020 for failing to adequately supervise the decommissioning of its data centres in 2016. 

The Office of the Comptroller of the Currency imposed the penalty after discovering that the bank: failed to effectively assess or address risks associated with decommissioning its hardware; failed to adequately assess the risk of subcontracting the decommissioning work, including exercising adequate due diligence in selecting a vendor and monitoring its performance; and failed to maintain appropriate inventory of customer data stored on the decommissioned hardware devices.