Articles Posted in General Blog

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In a fast-paced practice with budget-conscious clients, attorneys typically talk, make agreements and then move on. In most cases, the agreements are upheld, and the parties abide by them. For some, however, one side fails to uphold the commitment and may even dispute the terms of the agreement. The resulting dispute can arise from a myriad of reasons – running the gamut from a simple miscommunication to lack of integrity. And the problem is, you never know which agreements will be upheld and which will later become the subject of dispute.

The confirmation letter has become a lost art. In a carefully drafted confirmation letter, a prudent attorney takes the time to set out the precise terms of the agreement that just occurred, and sends it to the other participants for their confirmation, adjustment, and (most often) silence. These writings typically represent the best evidence of the parties’ intent at the time and afford the parties an opportunity to immediately clarify any miscommunication. While silence in the face of a confirmation email does not equal assent, it is, however, sound evidence for a finder of fact that there was no disagreement to the terms of the agreement.

So in this lightning fast business environment of wheeling and dealing, take the time to put pen to paper (or email) on any agreement that you would later want to enforce. Those few minutes that you invest now can save precious time and resources in resolving conflict down the road.

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Credit unions must always be on guard against the possibility of internal fraud. A Baltimore credit union recently discovered that its CEO and her husband were embezzling money. She did so by falsifying records and issuing checks to herself under the guise of paying for bank expenses. Investigators also found irregularities in loans that the credit union and other financial institutions had made to the CEO.

Weak internal controls create an environment where fraud can fester and losses can quickly

mount. Credit unions have a variety of tools at their disposal to detect and prevent fraud. However, there are risks credit unions must bear in mind. Credit unions should first implement a robust fraud policy, which it updates, distributes, and requires all employees to sign on an annual basis. Fraud policies need to be carefully crafted to list specific violations and proper procedures for investigating possible violations. Credit unions should include language that obligates employees to report suspected fraud internally while protecting them from retaliation for reporting violations.

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Cybersecurity is the new frontier of fraud prevention. As more information ends up on the internet, retailers and financial institutions are learning it the hard way. The data breach of Target demonstrates that even when financial institutions are not the victim, they can still suffer losses. In 2013, over a three-week period, hackers gained access to Target’s point-of-sale system and obtained credit card data of 40 million customers. Credit unions incurred significant costs when customers learned of the breach and asked for their cards to be replaced. On September 15, 2015, a federal judge granted class-action status to financial institutions suing Target, but the loss of consumer confidence will be hard to replace.

Credit unions must learn from the Target data breach because hackers have begun to target financial institutions themselves. Just weeks ago, a Hawaiian credit union discovered that it had been the victim of hacking and is still trying to determine what information was taken. The Hawaiian credit union appears to be the victim of a common tactic of sending emails with legitimate appearing attachments that contain malicious software. All it takes is a single employee to open the attachment and then hackers can slowly infiltrate the credit union’s other computer systems by installing surveillance and key logging software. Hackers are then able to watch as employees perform routine functions, such as funds transfers, and then repeat the functions themselves at their convenience.

In determining the proper way to protect sensitive information, credit unions need to map out business processes to determine which transactions support which products and services. Such a review should include examining the roles that employees and third parties play in carrying out those processes. From there, a credit union can develop a proper plan to protect member information.

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