Imagine the excitement of being hand-picked by the CEO to execute an important and confidential financial transaction that is expected to take your company to the next level! Then imagine the emptiness of learning that there was no acquisition, the email you received with confidential instructions wasn't really from the CEO, and the money you wired is gone forever. You've been duped — the email was sent by an imposter with a spoofed email made to look real. And if you're the CEO, imagine finding out you have no insurance coverage for this loss! Unless you bought a specific endorsement, you probably don't.

In November 2017, the FBI noted a 2,370% increase in such incidents in the last two years and more than $5 billion in related losses over the last four years worldwide. The increasing prevalence of "social engineering" or "business email compromise" schemes has made waves in the insurance industry and has forced courts to answer this question: Is a financial loss connected to an email "spoof" covered by standard Computer Fraud or Funds Transfer Fraud insuring clauses found in commercial crime policies or financial institution bonds?

Recently, two federal courts of appeal have (correctly) answered this question in the negative. [Taylor & Lieberman v. Fed. Ins. Co., 681 Fed. Appx. 627 (9th Cir. 2017) and Apache Corp. v. Great Am. Ins. Co., 662 Fed. Appx. 252 (5th Cir. 2016)].The same question is now before the Second and Sixth Circuits in two similar cases decided differently by their respective district courts. Will the trend continue? Or will one of the courts deviate, creating a split among the circuits and a jurisdiction about which we must be wary.