Business e-mail compromise: sometimes you pay twice!

▤ Summary

A recent Ontario Small Claims Court decision highlights the importance of having effective workplace policies and procedures when it comes to transferring funds electronically. There was no contract between the two parties beyond the initial terms of settlement, and there was no evidence of misconduct, dishonesty, or negligence by the paralegal or her firm. In an era where the human element continues to make up the bulk of cyber claims managerial controls and employee training are essential in addressing these risk exposures. In the present case, had the defendant made a phone call after receiving the e-mail, they could have reduced the impact of the paralegal’s e-mail compromise and avoided having to pay out twice on a claim they thought settled. See: St. Lawrence Testing & Inspection Co. Ltd. v Lanark Leeds Distribution Ltd., 2019 CanLII 69697 (ON SCSM), This post was originally published on the Strigberger Brown Armstrong LLP blog on August 19, 2019.

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First Reference

$1M to $5M