Legal Fraud Prevention Addendum

LEGAL FRAUD PREVENTION ADDENDUM

This Legal Fraud Prevention Addendum ("Addendum") is made and entered into as of Effective Date: by and between Client Name: with principal place of business at Client Address: , and Service Provider Name: with principal place of business at Provider Address: .

RECITALS

WHEREAS, the parties have entered into one or more underlying agreements setting forth services to be provided by Service Provider to Client (the "Underlying Agreement"); and

WHEREAS, the parties desire to reduce the risk of fraudulent activity affecting either party, their customers, or their systems by adopting supplemental controls, reporting and remediation procedures; and

WHEREAS, the parties intend this Addendum to augment and be read together with the Underlying Agreement and to allocate responsibilities for fraud prevention, detection, response and remediation.

NOW, THEREFORE, in consideration of the mutual covenants contained herein and other good and valuable consideration, the parties agree as follows:

1. DEFINITIONS

For purposes of this Addendum, the following terms shall have the following meanings:

"Fraud" means any intentional act or omission by a person or entity undertaken with the purpose of obtaining an unauthorized benefit, causing a financial loss, or misrepresenting transaction information, including but not limited to false representation, unauthorized transactions, identity theft, or manipulation of records.

"Incident" means any actual or reasonably suspected event that constitutes Fraud or that materially compromises the integrity, confidentiality or availability of systems, accounts, or data that are relevant to the Underlying Agreement.

2. FRAUD PREVENTION OBLIGATIONS

Each party shall implement, maintain and enforce appropriate administrative, technical and physical safeguards designed to prevent, detect and mitigate Fraud in connection with its performance under the Underlying Agreement. Such safeguards shall include, at a minimum:

(a) reasonable identity verification and transaction validation procedures; (b) role-based access controls and least-privilege enforcement for systems processing transactions; (c) logging and retention of transactional and access logs sufficient to investigate suspected Fraud; and (d) periodic review and testing of controls.

Each party shall designate a Fraud Prevention Officer responsible for implementation and oversight. Client Fraud Prevention Officer: ; Provider Fraud Prevention Officer: .

3. MONITORING, REPORTING AND RESPONSE

3.1 Reporting Timeline. In the event of an Incident, the discovering party shall notify the other party without undue delay and in any event within hours of discovery, unless prohibited by law or criminal investigation.

3.2 Report Content. Initial reports shall include a description of the nature and scope of the Incident, the date and time of discovery, known or suspected affected accounts or records, and the name and contact information of the reporting party's Fraud Prevention Officer. The reporting party shall provide supplemental information as it becomes available.

3.3 Response. Upon notice of an Incident, the party receiving notice shall cooperate in good faith, take reasonable steps to contain and remediate the Incident, preserve relevant evidence, and, where appropriate, suspend affected accounts or transactions to prevent further loss.

4. INVESTIGATION AND FORENSIC ACCESS

4.1 Preservation. Each party shall preserve logs, records, backups and other evidence relevant to an Incident for a minimum period of days or as otherwise required by law.

4.2 Forensic Access. Subject to reasonable confidentiality protections and advance written notice, the non-breaching party shall permit the other party and its designated forensic experts to access systems, logs and personnel reasonably necessary to investigate the Incident. Access shall be conducted during normal business hours or at mutually agreed times and shall be carried out to minimize operational disruption.

5. AUDITS AND RECORDS

Either party may, upon reasonable prior written notice not less than days, conduct an audit or inspection of the other party's controls, policies and records relevant to fraud prevention. Audits shall be limited to once per calendar year, except where an Incident has occurred or there is reasonable evidence of non‑compliance.

Audits shall be conducted during normal business hours, shall not unreasonably interfere with operations, and shall be subject to confidentiality obligations comparable to those in this Addendum.

6. SUSPENSION AND REMEDIES

6.1 Suspension. If a party reasonably determines that Fraud or an Incident poses imminent risk of material loss or harm, that party may immediately suspend affected services or accounts upon written notice to the other party. Such suspension shall be lifted upon mutual agreement that the risk has been remedied.

6.2 Remedies. The parties' rights and remedies under this Addendum are cumulative and in addition to any rights or remedies available at law or in equity, including injunctive relief and recovery of actual damages resulting from Fraud.

7. INDEMNIFICATION

Each party (the "Indemnifying Party") shall indemnify, defend and hold harmless the other party (the "Indemnified Party") from and against all losses, liabilities, damages, costs and expenses (including reasonable attorneys' fees) to the extent arising out of or resulting from the Indemnifying Party's negligent or willful failure to implement or maintain the fraud prevention obligations required by this Addendum or from the Indemnifying Party's fraud, misrepresentation or intentional misconduct.

8. CONFIDENTIALITY

Information exchanged relating to an Incident, including investigative findings, forensics and remediation plans, shall be treated as Confidential Information. Confidential information may be disclosed to the extent required by law or to professional advisors and forensic consultants subject to confidentiality obligations at least as protective as those in the Underlying Agreement.

9. DATA RETENTION AND DESTRUCTION

Each party shall retain data and records necessary to investigate and remediate Fraud for the period required by law or, if longer, for the period specified in Section 4.1. Upon expiration of the retention period, each party shall securely delete or destroy such data in a manner designed to prevent recovery in accordance with industry best practices.

10. TRAINING AND SCREENING

Each party shall require personnel performing services under the Underlying Agreement to undergo reasonable background screening and periodic fraud‑prevention training. Training frequency: .

11. LIMITATION OF LIABILITY

Except for willful misconduct, gross negligence, or breaches giving rise to indemnification under Section 7, neither party shall be liable to the other for consequential, incidental, special or punitive damages arising from Fraud or an Incident. This limitation shall not reduce a party's obligation to take interim measures to contain or remediate Fraud.

12. NOTICES

13. MISCELLANEOUS

13.1 Governing Law. This Addendum shall be governed by and construed in accordance with the laws of the State of , without regard to conflict of laws principles.

13.2 Entire Agreement. This Addendum, together with the Underlying Agreement, constitutes the entire agreement of the parties with respect to fraud prevention and supersedes all prior or contemporaneous agreements, understandings and communications on that subject.

13.3 Amendments and Waiver. This Addendum may be amended only by a written instrument executed by authorized representatives of both parties. No waiver of any provision shall be effective unless in writing and signed by the waiving party.

13.4 Severability. If any provision of this Addendum is held invalid or unenforceable, the remaining provisions shall remain in full force and effect and the parties shall negotiate in good faith to replace the invalid provision with a valid provision achieving the original intent as closely as possible.

13.5 Counterparts. This Addendum may be executed in counterparts, each of which shall be deemed an original and all of which together shall constitute one instrument.

ATTACHMENTS

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