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What is a Man in the Middle Attack?  

After an unknown individual (\\u201cfraudster\\u201d) gained unauthorized access to  Fishobowl\\u2019s accountant, Ms. Wendy Williams\\u2019 e-mail account. Once inside  Ms. Williams\\u2019 e-mail account, the fraudster created certain \\u201crules\\u201d to  redirect certain e-mail communications within the e-mail system. One  rule redirected e-mail communications containing certain keywords to an  e-mail account that is not associated with Fishbowl. Another rule marked  e-mail communications sent from \\u201cfedins.com\\u201d as having already been  \\u201cread, \\u201d and automatically stored them in the \\u201cRSS Subscriptions\\u201d  folder. 

These rules prevented Ms. Williams from noticing certain e-mail  communications, including e-mails from Federated Insurance regarding  invoice payments.  In Fishbowl Solutions, Inc. v. The Hanover Insurance Company, No.  21-cv-00794 (SRN/BRT), United States District Court, D. Minnesota (May  9, 2022) it became clear that the purpose of the scheme was to trick  Fishbowl\\u2019s customers into paying invoices to the fraudster without  Fishbowl noticing. Pursuant to this scheme, the fraudster directed six  of Fishbowl\\u2019s customers to change how and where to make their payments.  By employing a variety of techniques to conceal the scheme, the  fraudster posed as Ms. Williams when communicating by e-mail with  Federated Insurance. The fraudster also posed as Federated Insurance  when communicating by e-mail with Ms. Williams. As a result of the  scheme, Federated Insurance made two payments to the fraudster, totaling  $176,962. The fraudster was a classic man in the middle who attacked  Fishbowl to the tune of more than $176,962.

Fishbowl discovered the scheme and informed the six customers about the  scheme, five of them were able to recall or redirect their payments.  However, Federated Insurance was unable to do so. Although the United  States Secret Service recovered $29,035.79 of the monies paid by  Federated Insurance to the fraudster, Fishbowl suffered a loss of the  difference, which totaled $147,926.21.  

The Minnesota Legislature has created a private cause of action to  penalize bad faith denial of benefits by insurance providers. Under the  statute, a party, after commencing a civil suit, may make a motion to  amend the pleadings to claim recovery of taxable costs. The applicable  legal basis for establishing a claim under the statute is a two-prong  test, which is as follows:  The court may award as taxable costs to an insured . . . if the insured  can show:  (1) the absence of a reasonable basis for denying the benefits of the  insurance policy; and  (2) that the insurer knew of the lack of a reasonable basis for denying  the benefits of the insurance policy or acted in reckless disregard of  the lack of a reasonable basis for denying the benefits of the insurance  policy.  At this stage of the proceedings, plaintiff needs to plausibly plead  facts that demonstrate each prong of the test.