Fraudster Collects Over $250,000

Read the full article at https://lnkd.in/gb8qqV5e and see the full video at https://lnkd.in/gaKKffrb and at https://lnkd.in/gVp3uMUn and at https://zalma.com/blog plus more than 4450 posts.

Valero Followed Instructions from Fraudster

In Valero Title Incorporated v. RLI Insurance Company, No. 22-20155, USCA, Fifth Circuit (February 1, 2023) Valero sued its insurer RLI Insurance Company that denied Valero’s proof of loss claim, which RLI determined was not covered by the funds transfer fraud endorsement in Valero’s crime protection insurance policy. The district court disagreed and granted partial summary judgment to Valero.

FACTS

Valero purchased a crime-protection policy from RLI that included a funds transfer fraud endorsement. The relevant definition for “fraudulent instruction” is “[a] written instruction . . . issued by you, which was forged or altered by someone other than you without your knowledge or consent, or which purports to have been issued by you, but was in fact fraudulently issued without your knowledge or consent.”

Because the Valero employee did not recognize that these instructions were fraudulent, she instructed Valero’s bank to wire $250,945.31 to the fraudster.

ANALYSIS

RLI argued that because the instruction here was issued as it was authorized and approved by Valero, it cannot be “a written instruction . . . issued by you, which was forged or altered by someone other than you without your knowledge or consent.”

The instruction Valero issued to its bank was the same instruction Valero received from the fraudster posing as the lender. Unknown to Valero, the instruction was not the same as the instruction provided by the lender; it was altered to include different recipient account information. Thus, when Valero issued the instruction to its bank, it was not a fraudulent instruction that was “forged or altered by someone other than [Valero] without [Valero’s] knowledge or consent.”

ZALMA OPINION

Insurance contracts are interpreted as written. Since the language of the policy was clear and unambiguous, it covered the error of the Valero employee who accepted an e-mail instruction to send the money it owed to a fraud perpetrator’s account rather than to the account of the lender to whom the money was owed.

(c) 2023 Barry Zalma & ClaimSchool, Inc.

Subscribe and receive videos limited to subscribers of Excellence in Claims Handling at locals.com https://lnkd.in/gfFKUaTf.

Go to substack at https://lnkd.in/gEEnV7Dd Consider subscribing to my publications at substack at https://lnkd.in/gEEnV7Dd

Barry Zalma, Esq., CFE is available at http://www.zalma.com and [email protected]

 Go to Barry Zalma videos at Rumble.com at https://lnkd.in/gV9QJYH; Go to Barry Zalma on YouTube- https://lnkd.in/g3cjXbnE to the Insurance Claims Library – https://lnkd.in/gWVSBde