Cachet Financial Services: U.S. District Court finds No Coverage under Commercial Crime Policy for Alleged ACH Kiting and Related Frauds
By Chris McKibbin and Daniel Silla In the recent decision of Cachet Financial Services v. Berkley Insurance Company, the United States District Court for the Central District of California found no coverage under a commercial crime policy in respect of several alleged frauds involving a payroll processor. The decision is instructive for fidelity claims professionals as to the meaning of “alteration” in the Forgery insuring agreement found in commercial crime and financial institutions coverages. The decision also reinforces existing jurisprudence that restricts the Computer Fraud insuring agreement to situations involving “hacking” and unauthorized access, rather than fraudulent misuse of