ethics

4 Ways to Protect Your Small Business from Fraud

by Fred Abramson on March 31, 2010 · 1 comment

Fraud is not limited to the Bernie Madoff’s of the world.  Because of the recession, it should come to no surprise to learn that financial problems are more likely to lead to more fraud.

Fraud is a huge problem.  According to the Association of Fraud Examiners 2008 report on occupational fraud and abuse, companies lose 7 percent of annual revenue due to this problem. The report also indicates that small businesses are more likely to be victimsthan large companies.

Small businesses are having more difficulty with fraud not only because employees have an increased workload, but also because they have less resources to stop it.

Generally fraud occurs in four primary areas.  I will provide a brief overview and let you know of ways that you can help limit your company from being a victim.

Checks

Altered checks is a major problem for businesses. What out for mistakes from payroll companies and bookkeepers.

Owners should:

  • limit the use of rubber stamps
  • have an outside accountant check your books monthly

Fraud to order

Employees can make fake orders. Check inventory to see if anything is missing.

Owners should:

  • Conduct surprise audits
  • limit access to cash
  • install security cameras

Encourage employees to report Fraud

According the ACFE study, most fraud was uncovered by co-workers.

  • Encourage tips and make sure they reach you.
  • Make it easy for an employee to report the problem anonymously.

Fake employees

This fraud is especially prevelent in the construction industry.  A foreman on a construction site mays say has ten employees and he really has 9.  He collects the 10th  paycheck for himself.  You can avoid this by:

  • handing paycheck personally
  • create a computer program to detect missing hours.

If you or your company is a victim of fraud, contact me at the Law Office of Frederic R. Abramson at  212-233-0666.

Enhanced by Zemanta

Facebook’s Law Department is Ready to Brawl over Requests for Information from a User’s Facebook Account

by Fred Abramson on February 2, 2010 · 5 comments

Image representing Facebook as depicted in Cru...
Image via CrunchBase

What privacy rights do you have on social networks? Nearly everyday, civil litigators like myself and law enforcement officials request information from Facebook regarding user information.  Understandably, Facebook has been very difficult in responding to such requests, believing that users have a right to privacy concerning its users information. But how much right should users of social networks have over information that is of public record?

Many social networking sites have taken the position that they will not respond to requests for information without a subpoena.  This is a problem because users cannot obtain access to their accounts even if their account has been hacked.

This is especially problematic when it comes to the problem of cyber bullying. I have been trying to obtain records from Facebook for a client whose child whose account has been hacked by a cyber bully.  Facebook has been unwilling to provide information to me about my clients own account.

According to Law.com, the Deputy General Counsel of Facebook, Mark Howitson told lawyers at the Legal Tech Conference in New York today that they are ready to fight requests for user  information without a subpoena.

Unfortunately, you can only serve that subpoena in California which is problematic if you live in New York. Even with a subpoena, they will only provide basic subscriber information unless that user gives his or her consent.  The company believes that it does not have to provide user information under the Electronic Communications Privacy Act which was passed before Mark Zuckerberg, the founder of Facebook, danced to his first disco tune at his bar mitzvah. Since this issue is relatively new, a congressional hearing is forthcoming.

Mr. Howiston suggests that the best way to obtain information from Facebook is to make a simple friend request, which is of little utility.

What do you think?  What right of privacy should you have on social networks?  Should there be a cyber bullying exception?

Reblog this post [with Zemanta]

Internet Defamation Law: Twitter, Facebook and Bloggers.

by Fred Abramson on October 29, 2009 · 2 comments

Internet Defamation Law is becoming an increasingly important problem. Bloggers and anyone else using social media need to be aware of what they post online.  There is a serious threat of what you post can result in litigation.

I recently reported that there has been a 216% increase in libel lawsuits against bloggers.  Courtney Love’s Twitter defamation case is not going away.

Yelp, the popular review site, has been at the center of the debate because people are using the service to write reviews that are untrue.

A $1 million judgment, including an injunction and costs was granted against a defendant who persisted in posting false and defamatory statements in online forums regarding his fraudulent transactions at the expense of an online company. (thanks @jdtwitt)

How do you know if a statement that is written online rises to the level of  Defamation?

Defamation is an invasion of the interest in reputation and good name of a living person, which holds that person up to hatred, contempt, ridicule, or shunned by others (William Prosser, Law of  Torts 737 (4th ed 1980). You can sue both an individual and a company for defamation. Libel is written defamation, slander is oral.  A defamation claim may also raise the issue of intentional infliction of emotional distress.

Publication: The statement must be disseminated to a third party before a lawsuit can be commenced.  What this means is that other people must be aware of the remark before you can claim that someone’s business interests are damaged.

If the conversation is in email form and only the sender and recipient are  involved in the conversation, there is no cause of action.   Section 230 of the Communications Decency Act generally protects online service providers from being sued as a result of defamatory postings by users.

Damages: You must prove that you have been harmed in some way.  There are some cases where you don’t have to prove damages.  They are:

  • any remark about the unchastity of a women (sounds really antiquated)
  • imputation of a crime or of a loathsome disease
  • any statement about that person that affects his or her business reputation.

Before you race over to my office, you need to consider the following  issues to assess whether there are any defenses :

  • Is the work a parody? “Fake” Web sites and social media profiles appear to be a developing trend.
  • Is the person a alive, a public figure, private person or politician?
  • Is there anyone else objected to the post?
  • Are the statements made wrong?
  • Has anyone changed any of the content?
  • Is the statement or any of the alleged remarks true?
  • Is the remark accurate?
  • Has the publisher of the statement checked whether the remark was accurate?
  • When was the statement made? You must be aware of the statute of limitations.
  • Does the person who you would like to sue have insurance?  Without a deep pocket, your judgment is worthless.

What should you to protect yourself from Defamation lawsuits if you are a blogger?

If you are a content provider or blogger, you may find yourself facing a defamation lawsuit even if you did not write the remark.  For example, you may be liable for not reviewing the material posted on your site.  I would recommend that you purchase  E&O insurance.  You should also check your homeowners insurance policy, as many policies provide  coverage for defamation related lawsuits.

Reblog this post [with Zemanta]