Patelco settles class-action lawsuit over cyberattack for $7.25M

Patelco Credit Union has made significant moves in response to the cybersecurity breach it suffered last year, which affected nearly half a million of its customers. One of these moves involves settling a class-action lawsuit that was filed by affected customers in the aftermath of the breach. This legal action came shortly after Patelco announced the appointment of Ricardo Araujo as its new chief audit executive.

Araujo’s appointment is seen as a crucial step in strengthening Patelco’s internal auditing team, especially after the credit union was issued a cease and desist order by the state due to identified “unsafe and unsound practices” in the wake of the cyberattack. In his statement, Araujo expressed his commitment to enhancing risk management and security protocols within the organization in collaboration with various business groups.

The consent order issued to Patelco by the state Commissioner of Financial Protection and Innovation earlier this year required the credit union to pay a $100,000 fee and enhance its auditing and cybersecurity risk analysis teams. Araujo’s responsibilities include overseeing internal audit operations and working closely with the chief risk officer, Mani Massoomi, to fortify auditing processes and secure the company’s operations.

Patelco’s CEO, Erin Mendez, expressed confidence in Araujo’s ability to strengthen risk management practices and contribute to the long-term success of the organization. This reassurance signifies the importance of maintaining robust risk management strategies to safeguard the integrity of Patelco’s operations.

In addition to Araujo’s appointment, Patelco reached a significant milestone with a $7.25 million settlement in the class-action lawsuit involving 12 named plaintiffs. The agreement, which does not require Patelco to admit wrongdoing, represents a step towards resolving legal matters arising from the cybersecurity incident. This settlement is part of the credit union’s efforts to address the repercussions of the breach and restore customer trust.

While Patelco is making progress in settling some legal disputes related to the cyberattack, there are still ongoing court cases, including one involving a married couple who claim to have incurred fraudulent charges during the outage period. The outcome of these cases will shed light on the broader implications of the cyberattack and the measures required to prevent such incidents in the future.

Overall, Patelco’s recent actions, including the settlement of the class-action lawsuit and the appointment of Ricardo Araujo, reflect the credit union’s commitment to addressing the aftermath of the cybersecurity breach. By strengthening internal audit processes and resolving legal disputes, Patelco aims to rebuild trust with its customers and enhance its cybersecurity measures to prevent future threats.