Interactive Communities

In Interactive Communities Int’l v. Great Am. Ins. Co., 2018 U.S. App. LEXIS 12410 (11th Cir. May 10, 2018), the insured sold “chits,” which have a specific monetary value and can be redeemed by loading their monetary value to a debit card. In order to redeem the chits, consumers could call into a computerized interactive voice response (IVR) system, type in a PIN, and have the funds loaded onto their debit card. Fraudsters identified a glitch in the IVR that allowed them to redeem the same chit several times by making multiple simultaneous calls to the IVR system. This caused the insured to suffer over $11 million in losses. The insured submitted a claim pursuant to the Computer Fraud policy, which provided coverage for “loss of, and loss from damage to, money, securities and other property resulting directly from the use of any computer to fraudulently cause a transfer of that property ….” Great American denied the claim, and the insured filed suit. The Northern District of Georgia, sided with Great American, finding: (1) the loss did not involve “use” of a computer; and (2) the loss did not “result directly” from use of any computer.
Continue Reading Computer Fraud Policy: Eleventh Circuit Affirms District Court’s Finding Of No Coverage For $11M Fraud Claim