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Reducing the Risk of Errant Email with New Technology:
By Scott E. Blakeley, Esq.

E-mail is revolutionizing how credit professionals communicate. As the credit department goes electronic, credit professionals depend even more on e-mail to communicate with customers and credit colleagues. Credit professionals are also using e-mail to automatically invoice customers through their Web site, and customers are providing credit professionals with confidential financial information to assist with the credit analysis. The credit professional and customer can negotiate online over credit terms. Underscoring the explosion of e-mail use in B2B, businesses around the world sending 13 billion e-mails a day.

However, the speed and ease of e-mail has resulted in a less formal means of communicating than letters. The ability to share electronically confidential customer information carries with it some risks to the credit professional. Further, an errant email, or one that is carelessly written, can prove costly to a vendor that may later be involved in litigation with a customer. Indeed, it seems daily there is a headline of an errant or poorly worded e-mail harming a business.

What e-mail protocol should the credit department follow to reduce the risk of an errant e-mail? Where a credit professional has been provided a customer's confidential information through e-mail, what steps should the credit professional take to keep e-mail communication confidential and out of a lawsuit?

E-Mail and Protocol

E-mail tends to be more relaxed, containing discussions that would not normally be committee to paper. Every employee in the credit department should regard e-mail as formal as a written letter. Communications regarding customers should be kept " G-rated" in order to avoid exaggerations being taken out of context. Unlike a phone conversation that is temporary and not recorded, the e-mail, as discussed below, may not be. An e-mail can be the "smoking gun" in a customer dispute or government audit. Moreover, the e-mail can be used to assist in the testimony of the author of the e-mail, compared where the conversation was by phone and the party has forgotten.

E-Mail and Confidentiality

On occasion, a credit professional will receive financial information from a customer where the credit professional must sign a confidentiality agreement and agree to keep the information confidential. The credit professional must take reasonable steps to maintain the secrecy of the documents. The standard confidentiality agreement provides that the credit professional's company may be liable for damages if the confidential information is leaked.

E-Mail and Litigation

In litigation with a customer, the customer may want information from the vendor to build its to support for non-payment. The customer may send a subpoena requesting e-mail and other electronic communications from the vendor. With electronic discovery, e-mails involving the customer may be ordered produced.

A problem with e-mail from a litigation standpoint is that it creates a lasting record, unlike a phone call that is temporary. A vendor can be compelled to produce e-mailed material in litigation, unless otherwise privileged. If the credit professional's company has a uniform policy of email expirations or shredding its e-mail unless it has some future value, the company embroiled in litigation will likely not be punished by a court if it does not turnover the information. However, if the vendor is embroiled in litigation it may make sense to retain the e-mail to avoid a negative suggestion.

New Technological Developments for Keeping E-Mail Communications Confidential and Out of a Lawsuit

Recent technological developments may provide greater protection for the credit professional from an errant or confidential e-mail falling in the hands of a competitor or other unintended party. New email systems can tell messages to selfdestruct after a certain amount of time, can limit the number of times a message is opened and read, tag messages so that they cannot be forwarded and label messages to prevent cutting, pasting or printing. This means that such e-mails are temporary, and from an evidentiary basis, may not fall in the hands of a competitor or used in a law-suit.

New developments for e-mail may also allow for the credit professional to block the recipient from pasting, printing or forwarding, including the accidental forwarding, the e-mail message. In other words, the credit professional may encrypt a set of rules with its e-mail that blocks forwarding the email -- a virtual e-mail paper shredder. Encryption is used to keep online communications like e-mail private. This would allow that a confidential e-mail communication not fall in the hands of a competitor. The recipient unlocks the e-mail with a key and is bound by the credit professional's terms. Another development is e-mail that is aut omatically erased after 24 hours after being opened, the equivalent of disappearing ink. Of course, for the credit professional looking to retain a customer's confidential information disappearing e-mail does to work.

The benefits to the credit professional for using encrypted e-mail is that confidential information, be it communications with a customer over credit terms or financial information provided by the customer, will not end up in a lawsuit or open up the door for the credit professional's company from being sued for breaching a confidentiality agreement.

Corporate Credit Executive Reprinted by permission from Trade Vendor Quarterly, Summer 03

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