Jonathan D. Epstein reports:
A debit-card security breach at a discount grocery chain that operates in 11 states is costing Five Star Bank as much as $850,000 in fraud losses.
Financial Institutions, the Warsaw-based parent of the bank, expects to suffer a pretax loss of about $750,000 to $850,000 in the fourth quarter in connection with fraudulent debit transactions, the company disclosed in a regulatory filing with the Securities and Exchange Commission.
Spokesman Matthew Murtha said the fraud stems from “ongoing” theft of customers’ confidential card information from national retailers, including clothing, gas and food stores. Some of the thefts occurred through hacking of computer systems, but others were on-site.
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Five Star was not unique in suffering losses, although its estimate appears much higher than those of two other financial institutions known to be affected: ESL Federal Credit Union in Rochester and Bank of Castile, a subsidiary of Ithacabased Tompkins Financial Corp.
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