New Customer applications
Certain industries have specialized laws and rules that require applications for new customers. These requirements specifically define new application contents. One of the main purposes of these requirements is to address risk.
These risks include:
These and other regulatory issues require specialized new customer and client applications. At most, an application customized by a lawyer is necessary to comply with the law. At least, a lawyer-created application is wise to reduce your lawsuit liability risk.
do i need an application for for new customers?
Yes. You Need an Application for every New Customer. The reasons include:
- The Law Requires an Application
- It is Your Defense Against Complaints
- It is Your Defense Against Lawsuits
There are laws that restrict what can be done with customers. There are laws requiring you to collect certain information about customers. There are conflicts between customers. Conflicts of interest may arise. Customers may transfer their business to others. The new customer application is a first line of defense. It is legal compliance for customer-based business risks. The application is one of your first opportunities to impress your customers. A poorly constructed new customer application created an early opportunity for a new customer to back out and choose a competitor. It is important to “nail” the customer application.
AN APPLICATION IS NEEDED When the Customer is an Entity
is the New Customer in an industry "of interest?"
Certain industries have special regulations, reporting requirements, and rules that apply to them. One does not have the luxury of claiming ignorance. Declaring “I never thought to ask and they never disclosed” will not thwart the government from a prosecution. Learn whether special rules apply to clients so that you may either comply with those rules or turn the client away.
Examples of a customer to whom special rules apply include a:
- Casino
- Gem/Precious Metal Dealer
- Gun/Firearms Dealer
- Money Services Business
- Money Transmittor
- Foreign N.G.O. (Non-Governmental Organization)
- Foreign PEP (Politically Exposed Person)
The best type of problem is an avoided problem. Customer applications help you see, decide, deal with, and possibly avoid problem clients.
Avoid Being Sued by your Customer Through a Well-Drafted Application
Lawsuits arise when someone loses money or is otherwise damaged. Examples of instigating events include:
- Economic Damages
- Loss of Business Opportunity
- Pain
- Suffering
- Reputation Damage
- Personal Injury
- Real Estate (land) loss
- Penalties defined by law
Will you be sued when one of your customers perceives they have suffered a loss? you may “get along” wonderfully. However, when it comes between their relationship with you, and providing for their family, keeping their job, saving their reputation, assigning blame, and getting money, “get along” is unlikely to be enough.
The basis of any lawsuit is the breach of a duty. The duty, or its breach, is often defined at the outset of the relationship. This is where the customer application shines brightest! A well thought-out, smartly drafted application can save your business and your personal assets. Do not be “penny-wise and pound-foolish.” Begin with the end in mind in your business relationships.
Trial lawyer Matt Hamilton graduated from the University of Missouri in 1995 with Science degrees in Logistics, Marketing, and Business Administration. Juris Doctor, 1999.
