Claims Retrospective – Combating Fraud Is an Unfortunate but Necessary Part of the Engineer’s Practice.
In recent years, we have seen multiple instances involving the use of insureds’ seals/stamps and/or information and likeness without the insureds’ knowledge or permission.
For example, insureds have reported that persons or entities have reproduced or copied their stamps and/or seals onto drawings and plans that the engineers did not create or even review, and then submitted these drawings and plans to local building departments to obtain permits.
Additionally, insureds have reported that their name, information, identity, and/or likeness has been included on plans, drawings, specifications, or in advertisements and internet postings without their knowledge or consent. In one recent example, someone posing as the insured engineer placed false postings on a website and solicited business from unknowing consumers.
It can be difficult, and in some instances impossible, for the engineers to discover this fraudulent conduct on their own. Indeed, engineers often discover the fraudulent conduct when the duped consumers or other interested parties contact the engineers directly to request information about a particular project. However, in some instances, the engineers discovered the fraudulent conduct when searching for their own information on the internet or searching projects through the local building department. Engineers might find it useful to conduct searches for their own information a couple of times a year.
Another tactic to avoid or reduce the instances or consequences of such fraud is to do business with reputable companies and individuals. Many times, the fraudulent conduct is undertaken by former clients of the engineers. These clients, having had access to documents with the engineers’ stamp and/or seal, simply attempt to reuse the stamp and/or seal on a different project, hoping that they will not be caught. In hindsight, the engineer often recalls the client displaying red flags prior to the commencement of the project.
For example, the potential client may be difficult to contact, attempt to have the engineer do little to no work and simply “rubber stamp” plans or drawings already in existence, and/or attempt to avoid paying the full cost for the requested services. If something feels off with the potential client, the engineer may want to consider whether to do business with the potential client in the first place.
However, once the engineer has learned of fraudulent conduct involving the use of his/her information, likeness, identity, or stamp/seal, the engineer can and should take certain steps to end the fraudulent conduct and avoid claims arising from the fraudulent conduct.
First, the engineer should report the fraudulent conduct to the municipality involved, the local professional board, local law enforcement if applicable, and/or any other authorities involved. Second, the engineer should instruct the website provider and any other advertisers to remove the offending posts and advertisements. Finally, the engineer should report the matter to their professional liability insurance carrier as well as any other appropriate insurance carriers, such as a cyber insurance carrier.
The insurance carriers may be able to provide some assistance to the engineer. Further, the insurance carriers and the engineers will be in a better position to deal with any claims against the engineer that may result from the third party’s fraudulent conduct if the carrier is aware of the problem and the engineer has taken steps to limit its effect.
