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Get It in Writing

By Adam Atlas

Bad things often happen to good people when they fail to keep a paper trail of their good intentions. I receive about two calls a week from people dealing with real disasters.

A few examples of their issues: a $50,000 fine from the card Associations for non-compliance with their rules; a surprise listing on the Member Alert to Control High-risk Merchants (MATCH) report; and $300,000 in unexpected ISO liability.

If these individuals had made a point to create a paper trail of their actions and agreements, they might have prevented at least half of the disasters. While I am grateful for their calls, because it means work for me, it also pains me to see them dealing with messes that they otherwise might have avoided.

I hope to provide readers of this column, whether they work with Associations, banks or processors or as ISOs or merchant level salespeople, a few tips on how to document their actions in order to help prevent many of the fiascoes that take place in our industry.

Don't Believe It Until It's in Writing

When negotiating ISO deals or buyouts, a lot is said on the phone, at the golf course and elsewhere. Sometimes parties will take weeks or even months to "finalize" pricing or other terms of the deal based on this oral and informal offer, only to discover that what is put down in writing doesn't match the old oral agreement.

If someone offers to buy your portfolio for 30 times your monthly residual, don't waste time negotiating the fine points of the buyout agreement unless you first have written confirmation of the offer.

You might think that I'm providing advice to help protect you against unscrupulous buyers.

This is part of my intent; however, as much as there are dishonest people doing business, we do get busy and sometimes forgetful. We might overlook major deal points somewhere between the initial handshake and the signed transaction documents.

What Is Writing?

For purposes of the law, each state has its own definition of what constitutes a written document, or "a writing." Depending on the nature of the transaction in question, a writing might have different meanings.

From a general common law perspective, a writing is an instrument bearing the signature or mark of its author. This definition varies by state and depending on circumstances.

The best and most conclusive type of document is an original, with signatures, that is notarized. The least tangible document (although occasionally it can be legally binding) is an e-mail.

As you can imagine, a range of written documents exists between these two extremes. Without being so formal as to hinder your business, I suggest that it's always better to have something in writing that closely resembles the original (i.e. a faxed document).

Each state has its own laws concerning the validity of faxed signatures.

Take some time to consider how important each written document is to your business and organize accordingly.

Date Documents

I'm working on a case right now in which a card Association fined an ISO $50,000 for purported non-compliance by one of the ISO's agents. Part of the case involves a dispute over whether the agent was an agent of the ISO at the time of the alleged infraction.

One of the key factors in this case is the availability of evidence that documents the timing of the agency relationship between the agent and the ISO.

This example illustrates how crucial it is to date all written documents. When two parties sign an agreement, both should date their signatures. Parties often sign on different dates. A record of both signature dates will help in the event of a dispute over when the agreement came into force.

Writing About the Secret Rules

It's hard for an ISO or processor to write anything about card Association rules when Visa and MasterCard make them secret and do not disclose them to the ISO or processor.

As most in the industry know, the secrecy of the rules serves as the giant elephant in the doorway to the card Associations, although credit is due to MasterCard for recently providing increased access to its rules online.

My advice on rule compliance is to put everything in writing. If you have doubts about your compliance, write your bank and ask for a written opinion on whether your practices fall in line with card Association rules. When it comes to card Association rules, never rely on an oral confirmation of compliance.

Confirm Conversations

If someone calls you and tells you something significant, take a few minutes to send him or her an e-mail confirming the information. Print a copy of the e-mail that shows you sent it, and put it in a safe place. This kind of self-serving evidence might come in very handy in a future dispute over the contents of the conversation.

Take Notes

Buy a notebook and take notes on all your conversations. The notes might save your business.


Along with an obligation to always put things in writing, you also have an obligation to read all incoming mail and notices carefully.

Sometimes an important e-mail or letter gets lumped in with junk mail. For this reason, create a private, "junk-mail free" e-mail account through which you do most of your business correspondence.

Nonetheless, keep track of all incoming messages because businesses sometimes use generic e-mail addresses to send important notices.

I don't want to counsel readers to become obsessive about writing; I merely want to emphasize the significance of writing as legal evidence to support otherwise undocumented business negotiations and deals.

Prudence should never be so extreme as to get in the way of the normal functioning of business.

In publishing The Green Sheet, neither the author nor the publisher is engaged in rendering legal, accounting or other professional services. If you require legal advice or other expert assistance, seek the services of a competent professional. For more information on this article, e-mail Adam Atlas, Attorney at Law, at, or call him at 514-842-0886.

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