The major risks facing business in 2018

Business Interruption, cyber attacks, and natural catastrophes are, not surprisingly to us in the industry, the leading business risks this year, according to more than 1,900 risk experts from 80 countries polled for the latest Allianz Risk Barometer.

The survey by Allianz Global Corporate and Specialty reveals that cyber attacks and business interruption remain the leading two risks in Australia. What remains disappointing is that both cyber and business interruption coverage is often not taken out by many small to medium enterprises, commonly at their peril.

I continue to urge all business owners and managers to discuss these and other risks with their insurance broker.

Changes to legislation/regulation and natural catastrophes are also high on the list.

To read the excellent full report please visit: 

I conclude with their very insightful infographic.

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Product Recalls Australia – 26 September 2017

This week’s product recalls includes the following:

Knog Pty Ltd — Knog Frog Strobe Bicycle Light

Read more

Mazda Australia Pty Ltd — Mazda BT-50

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Cyclingdeal — Road Mountain Bike Bicycle Cycling Adult Helmet

Read more

Lenoxx Electronics Aust Pty Ltd — Electric Blanket

Read more

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Finally something a government has done that actually makes sense!

It was really great to read that the Victorian Government has removed stamp duty from insurance on farm policies. Well done!

This on top of the removal of Fire Services Levy is a great initiative and makes the vital protection provided by insurance affordable by a segment of our economy who can least afford not to have it.

Now if only other governments would show as much leadership and good sense. Three come immediately to mind that should follow suit.

Home and business owners in North Queensland are struggling due to the high cost of insurance yet, after Cyclone Yasi and the Brisbane Foods in 2011 the Queensland State Government increased stamp duty on insurance from 9% to 10% (a full 1% increase at a time when a government with even 1 eye open should have seen the importance of business and home owners to be fully insured.

Thorough research by Federal Government Departments has shown that the pricing of insurance in North Queensland is fairly priced on the risk being transferred to insurers. Thank goodness those advocating for a Mutual did not succeed as Tropical Cyclone Debbie would have probably wiped out the fund, everyone’s investment and left many people uninsured.

Let’s save all the money on enquiries and address the elephant in the room. If the Queensland Government followed the lead of Victoria and removed Stamp Duty followed by the Federal Government reducing the Terrorism Levy for those in North Queensland the cost of insurance would fall by more than 10%!

The decision by the New Zealand Government to drastically increase the cost of insurance due to changes to the Fire Service Levy defy understanding for they, like the Queensland Government, should understand the value to their economy of everyone being well insured.

The third Government in the trio is the Tasmanian government, who currently holds the record of taxing their business owners the most through insurance. This of course is a disincentive to development.

Like people around the world, I have become greatly disillusioned with the lack of statesmanship in our politicians where it is power at all cost with more than just a little bit of ego gone mad to boot. It is in this frame of mind that I see some hope and refuse to believe my inner doubt that the decision was made to buy votes and not protect the State’s economy. The reality is what ever the reason, I am extremely pleased. Well done Victoria.

I witness far too often the heartbreak and financial stress that home and business owners face when they are not fully insured and so I urge Victorian’s benefiting from this change to take this valuable opportunity to review your insurance and make sure you are fully protected to make the most of your Government’s wise change of policy.

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Business Interruption Issues Series – Part 5 – Time Excesses – Part D – Possible Solutions

After addressing 3 common problems in time excesses last week, I return to the topic with some possible solutions.

What is the Answer?

I would suggest there are several answers to the problems of time deductibles, and would like to explore three with you.

The first is to replace the excess/deductible with a franchise. If the insured business is disrupted due to an event for a period less than the franchise of say 1, 2 or 3 days, then the loss will be at the full expense of the Insured. If it extends beyond the period of the franchise, then the entire amount would be met by the insurer. This would mean that the Insured would carry the risk for minor periods of disruption, but beyond that they would have the comfort of having full insurance subject to adequacy of insurance etc.

I appreciate the insurance industry need not be there to protect short term, what we call working losses. The cost of doing so in just calculating such losses often proving they are not real losses in any event but just delayed sales would increase the cost of business interruption insurance prohibitively. However, the cost of working out a time excess can be significant and cause the Insured to feel cheated. I know that is how I feel every time I put in a health insurance claim when I consider the premium I pay each year.

I would rather see the client get the amount rather than it go to loss adjusters and claims prepares trying to agree an equitable allowance.

Some underwriters are worried that an insured can manipulate the stop time and so get a claim paid. I think in disruption such as in failure of public utilities, or closure by public authority, the Insured has no chance to influence when the issue is resolved. As such, I do not see this as an issue. It has certainly not come up in the claims I have handled under business packs where time franchises are more common under high quality wordings.

The second solution is to apply a monetary deductible, which both the Insured and insurer know and understand in advance. I would suspect that this would be easier for the underwriter to underwrite and the Insured would be in a much clearer position as to the effect of the deductible in the event of a claim. It would also reduce the stress and claims handling costs following a loss.

The third alternative is simply a combination of the first two. The monetary deductible would apply after the franchise period had lapsed or it could be the “greater of”.

1.2                 Summary of Chapter

Space limitations have only allowed three case studies to be provided. Underwriters, claims staff and Insureds who lodged a claim following any business interruption claim with a time deductible can provide similar examples of complications arising from their experiences of the interpretation of time deductibles.

At the very least, time deductibles need to be reviewed to incorporate clear details in the policy as to how they should operate. Alternatively, they should be replaced with a franchise, a set monetary deductible, or a combination of both. Food for thought to improve what, in the main, is a very good product.

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Business Interruption Issues Series – Part 4 – Time Excesses – Part C


Insurance should not be a game of Russian Roulette

This is the third post in this series on time excesses and the fourth on common business interruption issues that started on Monday 10th April 2017.


I continue the examination of time excesses using another case study.

Case Study 3: The Policy will not Cover Losses within the First 48 Hours

The third case involves a wording that states the policy will not cover losses within the first 48 hours. In many cases of smaller commercial and industrial premises, the Insured was not advised to shut down their gas until after 5.00pm on Friday, 25 September 1998. 

If they had no planned production within the next 48 hours, they suffered no losses and, as such, the time deductible did not apply. Had the shutdown occurred at the same time on Sunday, Monday, Tuesday, Wednesday or Thursday, then the same time deductible would have applied, but this time with a financial penalty being borne by the insured business.

On the other hand, taking restaurants for an example, Friday and Saturday evenings are often their busiest nights. They, therefore, were penalised by pure chance due to the fact that the disruption caused by the Longford Gas Explosion occurred on a Friday. For them, if it had occurred on a Sunday or Monday, the reduction in the claim due to the application of the deductible would have been much less.

Rather than know their respective positions when a loss occurs, it could be said that the insurers and operators of businesses that do not operate 7 days per week are both playing Russian Roulette with a revolver holding 5 bullets in a 7-chamber gun. That is, 5 working days in a 7-day week.

Tomorrow is Good Friday and as it is a religious holiday for many, coupled with the fact that many in the industry have been working their tails off with the cyclone claims, I, while not wishing to follow the approach of a TV soap opera, will hold off till next Tuesday to provide some alternative solutions.

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Recap of week one.

LMI activated its Emergency Response plan on Thursday 30 March starting first in Mackay, Proserpine, Bowen and surrounds and as we were able to gain access, extended this into the Whitsundays. Other teams looked after claims in South East Queensland, Murwillumbah and Lismore.

Within this first 10 days, we have arranged for progress payments for close to $40 millions to be made to assist business recovery. This of course, makes a huge difference to those businesses allowing them to engage trades, replace stock and recover that much quicker. But more it helps the suppliers, tradespeople etc asked to step in and do the rebuild etc. It helps the whole community.

I make this point in an effort to show the public that with the right correct adviser/broker arranging the correct coverage with a quality insurer, followed up when it really matters with good claims service, insurance is an invaluable service protecting you from financial loss.

We do not hear about the huge effort, insurers, their claims teams, loss adjusters, and claims preparers put in after every such event to help our customers and communities.

Of course, we see the horror stories in all the regions we are responding to, where at the time it was considered too high a premium and now having taken the risk of “it will never happen to me”, business owners are now faced with significant uninsured losses both in property damage and business interruption.

The reality is no matter how skilled and willing to help the LMI team are, we cannot put the toothpaste back in the tube. If the cover is not there, or is not adequate then we cannot wave a magic wand and fix it.

Even if your business was not affected by the event, please remember this at your next renewal. Make sure that your assets, business income and liabilities are insured adequately just in case it is your turn next time.

I end on a positive note. One of our clients we visited had felt overwhelmed by the whole event and was upset that no money was offered by the loss adjuster during his first visit. The Insured sent a text to her broker who in turn rang the Insured straight away. She rang me and Rian Jenkinson our State Manager in Queensland acting as a Claims Preparer got straight onto it and with the help of the claims team and the loss adjuster who certainly did not mean to cause any stress arranged a progress payment. The insurer sent out their senior property claims manager who assisted by arranging a second payment at the end of the week.

It does make such a difference to have a good insurer on board.

Insurance is not just about $, it is about people.

Despite his very hectic workload, Rian dropped in and picked up some flowers and a bottle of wine for the Insured and her husband from their broker, he and I to put a smile back on their face and let them know they were not alone at this time.

This small gesture had a really marked effect as we now focus and getting this business back up and running “double quick time”.

Thanks to all the insurers that helped us help your clients, to the brokers who have entrusted your client’s claims with us,  and a special well done to Rian for going the extra mile.



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Steps To Take Immediately Following A Loss


Below is a small section of a Guide which assists you to prepare a business insurance claim. It explains a raft of issues such as GST, under insurance and much more.

If you would like a free copy please email,

  •  Report the claim to your insurance broker/adviser or if you do not have one, contact your insurance company direct.
  • If you need assistance in mitigating your loss and or preparing your business / business interruption claim by an expert contact LMI Claims. They act for you and their fee is typically covered under your insurance program.
  • Do not admit liability to any party for any damage caused by the cyclone/storm. This may prejudice your insurance claim.
  • Limit access to the premises to those who have a legitimate reason for being on the premises. (Insurance loss adjusters or others acting for neighbours, customers, etc have no right to enter your premises. If in doubt consult your LMI Claims Preparer).
  • Take immediate action to minimise the loss.
  • Protect undamaged property from loss.
  • Appoint one person to represent your company and protect your interests in preparing the insurance claim (your LMI Claims Preparer). Provide the LMI Claims Preparer with a copy of your full Policy wording including the Policy Schedule.
  • Implement a methodology to capture all costs and expenses that the business will incur, e.g. create a separate and specific account number in the company’s financial accounting records.
  • Take photographs and/or video the damage. The more the better.
  • Set up clear lines of communication with the insurance loss adjuster appointed by the Insurer and ensure that all personnel understand the functions of the loss adjuster, your appointed claims preparer, insurance broker/adviser, etc. It is extremely important that nothing is misunderstood or misconstrued as this may well delay the claim or reduce the settlement. For this reason it is important that your LMI Claims Preparer be present during all discussions with the loss adjuster and that no email, letter or other communication go direct from you to the loss adjuster. LMI use a Claims Management Plan which is regularly updated so that you, your insurance broker and the claims preparer know the current position of your claim.
  • Consult contractors for an initial estimate of the scope and cost of repairs.
  • Identify temporary measures needed to resume operations and the associated extraordinary expenses that are incurred.
  • Retain all damaged property if at all possible as proof of ownership and damage to the loss adjuster. I appreciate this is not always possible when it comes to perishable foodstuffs which may create a health hazard but in such cases, photographs and videos mentioned above are important along with weights and or an accurate count.

I originally wrote this to assist people following Cyclone Debbie. Thinking about it a few weeks later and realising that due to the heading it could be pulled up at some future time, I would add that details of any third party that may have caused the incident needs to be kept along with any physical evidence of the cause and damage.

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A disturbing response to my post today on buying business insurance direct – Get Ready for a Manning Rant!

In response to my earlier post today I received this email from a distressed broker.

Thanks yet again Allan for your insights.

Yes; it is extremely distressing to note the upsurge in the so-called ‘direct’ market influence.

I’m going to be very blunt now & tell you about an experience I’ve had during the last week.

The son of a very loyal commercial client of 30 years standing spoke to me recently about his need for Liability insurance.

He is a refrigeration & air conditioning supplier/installer/maintenance technician.

Long story short; the quotes I prepared were between $2,300 right thru to $13,500. (These are what I expected from experience. Maybe not the $13,500 though!)

Yes; of course there are many nuanced coverage differences that I went to great lengths explaining to him.

End result??? He went with XYZ [insurer name withheld] of all insurers, for $575 total premium!

Yes; you read this correctly.

Is the coverage adequate?? I very much doubt it; but there you go…price wins out.

I pray he has no issues moving forward.

Just wanted to share this with you.

Take care – Gary.

Note I have not named the insurer but it is one that has featured in my blogs several times for questionable behaviour in both Australia and New Zealand and one that has advised buyers that they can purchase their home policy in lieu of a strata policy. Enough said.

Despite my attention naturally being focused on LMI’s Emergency response to Cyclone Debbie and the many major claims we have been entrusted with already, I could not get this situation out of my mind. I am sure it is not an isolated case.

I wonder what the refrigeration & air conditioning supplier/installer/maintenance technician would think of a potential customer who elected to purchase a new or even second hand unit when he the expert new that it was a load of rubbish and would fail when it came to the crunch! Yet this same person does not question why a policy that he is relying on to protect his business, his income stream, his superannuation and perhaps the mortgage over his home can be 25% of the price and still be as good!

Has the client considered the basics such as goods in Care Custody and Control? Obviously not as the policy selected provides NO cover for most items under this heading, according to page 10 of the policy.

This client has NO cover as a tenant for damage caused to the landlords building, NO cover for any temporary site under his care custody or control, NO cover for employees property. With the brokers policy he would have full cover to the limit of liability. For vehicles nearby in his care custody and control, say a client drops of a van with a request to fit a refrigerated unit. NO cover. Under the broker policy, full cover to the limit of the policy.

With regards to customers’ goods he now has $25,000 where as with the broker policy he would have $250,000 as a minimum.

So what happens if this Insured has a claim. With the broker he has the advice of the broker and $25,000 cover for claims preparation costs from an expert. With his current policy he has no cover for claims preparation. He is completely on his own.

Of course: “it will never happen to Me!” is what so many people think. Now let me tell you of a true claim I handled a few years ago. The insured just happened to be a refrigeration mechanic. A fire broke out in his premises and he had a vehicle in for fitting, yes you guessed it a refrigeration unit. The fire started in the truck and the forensic investigator said the refrigeration mechanic was to blame. Trouble was he had a policy just like this with no cover for vehicles or goods in care custody and control. I learned about the case about 9 months after the incident and I proved the refrigeration mechanic was not to blame at all. I took my report into the lawyers acting for the truck insurer and they agreed to withdraw their demand. I thought it was a great result and rushed out to advise the client only to learn that after his marriage broke up due to stress caused by the fire and the demand which threatened to mean they would lose their family home, the Insured had hung himself the night before. This is not made up. It is a true story that upsets me to this day. With a good policy from day one, this really nice man would have had the protection of a meaningful insurance policy, the family would not have had all the stress and the tragedy and guilt of losing their husband and father.

This is why I push so hard for people not to buy insurance on price alone. You are a bloody idiot if you do. I cannot make it plainer.

Back to this “cheap” policy. I have only just got started. Let us take a claim for the costs of Cleaning Up, Nullifying Removing etc pollutants following a sudden accident release. Under the broker policy he has cover for the full limit of the policy, under the one he has selected NO cover.

There is no cover for loading and unloading. Broker policy full cover to the full limit of liability.

The broker policy provides a right to pay out the full limit of liability. The “cheap” policy does not.

If the Insured incurs their own legal defence costs the “cheap” policy has a maximum of half the limit of liability, the broker policy has the full limit.

The same goes for legal costs to represent the insured at a coronial inquest. That is half the limit for the “cheap” policy, full cover for the broker policy.

The broker policy covers the Insured’s wages attending a hearing or trial. The “cheap” policy does not.

I have not even got started yet on the exclusions such as hot works, such an important thing for this occupation. In fact the “cheap” policy has more exclusions than any other liability wording I have ever read.

Another big one that is even wider than the hot works exclusion is one that states:  Policy excludes any failure to comply with any Commonwealth State Territory or Local Government law or any safety requirement obligation or regulation imposed by any other relevant authority. This is a very broad exclusion and if it were not for a failure at some time in safety then you would be unlikely to need a liability policy. If the client takes safety procedures with the same cavalier approach as they do with their insurance, this story is going to have a very bad ending.  When it does it will be Brand Insurance that is painted as the villain.  By the way, this new exclusion only came in from January 1, 2017. I would be interested how much notice the insurer has given to renewing clients of this major change.

I do not want to bore the reader but I am sure you get the picture.

But before I go, I would add a couple more points. I am not sure what the limit of coverage is for the “cheap” policy. My guess it is half or even a third of the broker policy.

Nearly there readers! I question the role of the regulator and government in all of this. Why do we allow the public to purchase a policy that really offers scant protection. What of the customers of this business person who think that he has liability cover if something does go wrong. They too are going to be in for just as big a surprise and again Brand Insurance will suffer.

All this is why I have started a campaign to Make Insurance Great Again. This “cheap” policy is certainly NOT great. I would not recommend it to anyone.

I wonder if this new client of the “cheap” insurer would understand what I have just written here?. More importantly, I bet the call centre person who sold the policy wouldn’t.

Brokers out there, please note this “cheap” insurer is on LMI and if you are confronted with this sort of situation, you can print off a comparison of the features and benefits in seconds showing the vast differences between the policy you recommend and theirs. This may help explain the huge difference in price that some new entrants offer to win new business.

I end with my often heard plea to the business owners and managers out there. Insurance is NOT about price. It is about getting the right ADVICE to provide good PROTECTION to your business and to you and your family. At the end of the day so much comes back to you as a personal risk that you are accepting when you get the wrong insurance.

There endeth tonight’s rant.

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Cyber incidents continue to dominate global risks

The 3rd largest Global Business Risk as reported by Allianz in their latest report is cyber incidents.  Only 4 years ago this risk was ranked 15th and has since dramatically increased, unsprisingly.

The sheer amount of phising emails and scams I receive each and every day is horrifying and this is why businesses and individuals are getting caught out every day by these sometimes obvious scams. However, as outlined in our own close call with a scam they are becoming more and more personal and tricky. This is why myself and Steven have written Mannings Guide to Cyber Security & Insurance as a free e-book for everyone to understand this risk, how to avoid it, as well as ensuring you have the right insurance in place should you get caught out.

WA Today reported that “At least $37.5 million was swindled by fraudsters using online scam methods in 2015 – and that’s just based on 41,000 reports that year to the Australian Competition and Consumer Commission.” This is something we at LMI Group have encountered and were lucky enough to not suffer financially, however it was quite the scare and a stressful experience for us. (You can read my article posted back in July 2016 here).

The ACCC have also released ‘The Little Black Book of Scams‘ to assist everyone in being able to spot these suspicious emails and to avoid them.




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“Watch out for this scam!” – Guest Post by Adam Courtenay from INTHEBLACK



Author: Adam Courtenay

Scammers are using social media sites to research you and your company, but there are ways to fight back.

Melbourne-based insurance claims expert Allan Manning was out of town recently when his wife received an unexpected email that appeared to come from him. A project needed to be funded and “could she please process a payment urgently?”

As financial controller of Manning’s company LMI Group, his wife, Helen, promptly replied that she would arrange payment as soon as he sent her the details.

A second email purportedly from Manning followed, seeking a payment of A$42,947 and saying a tax invoice would follow shortly. The instruction was to transfer the money directly to a bank account in Cranbourne, Victoria. Helen duly complied.

Just before 5pm when Manning returned to the office, his wife casually mentioned she had processed the remittance.

“What remittance?” When they realised what had happened Manning says they were both in shock.

LMI’s chief executive officer and financial controller had been hit by what some call “business email compromise” – also known as a whaling or spear-phishing scam.  The fraudster had successfully impersonated Manning and the money had been sent six hours earlier.

“At the time we were doing renovations in the Melbourne office, as well as renovations on our home and an upgrade of one of our web-based products,” Manning explains.

“The ‘project’ could have been payment for any number of things and the email looked like it came directly from me.”

By sheer luck, the fraudster had made an error in his own bank account number and the payment was stopped at Cranbourne. Manning then tried to lure the fraudster. Why not come to the office and pick up a cheque, he asked, writing as Helen.

The fraudster was having none of it. In the end, three fraudulent bank accounts were uncovered and details provided to the authorities.

Fraud experts say Manning’s situation is almost commonplace these days. He was a victim of social engineering fraud.

“It’s not about exploiting technology, but exploiting the person,” says Warren Dunn, partner in the fraud investigations and dispute services practice at Ernst & Young. Dunn rates this kind of fraud as among the top three scams globally.

Dunn says the “engineering” comes in three forms, each more sophisticated than the last. The first, like Manning’s, is an email seeking a quick funds transfer. The second asks the victim to telephone external lawyers, citing the remittance as confidential; and the third form is a fake vendor emailing or phoning someone in accounts payable and asking to change a real vendor’s address and bank details. In the last case, scammers have even been known to request updates on monies coming due.

Fraudsters are researching you and your company

All this relies on the fraudster building a picture of company personnel and processes. The fraudster may start with a corporate website, but Dunn says most often they are studying social media such as LinkedIn.

“He’ll know the potential victim is the finance manager, who he or she is linked to, who clicked on that person and who these people clicked on,” Dunn says.

“Then he’ll use Facebook to find out that the person is out of the country or at a conference. That’s when he’ll strike.”

Will a cyber insurance policy cover the loss? One insurance expert, who asked not to be named, says there is confusion on this issue.

“Victims think that since the email system was compromised it’s a network attack – but that’s not always the case. The fraudster has worked on relationships rather than the system. It’s a straight crime and if someone willingly paid the bogus bill there may be a problem on the claim.”

How to combat the fraudsters

Matthew Green, a partner and technology adviser at Grant Thornton, says the solution entails combining people, processes and technology. Not only do people need to be regularly trained to be aware of these frauds, but companies must review their processes so that enough controls are in place and working.

“If in doubt, ring the CEO back on the number you have for them – not the one offered to you in the bogus email,” says Green. He also suggests ensuring “there are multiple authorisations over a certain payment threshold”.

Employees must be trained to be suspicious of requests for secrecy or pressure for immediate action. If a request to transfer funds wouldn’t normally arrive via email, it should be treated with suspicion.

Green also recommends firms subscribe to a cloud-based email filtering service such as Mimecast or SpamTitan, even if some bogus mails will get through.

“You need to train staff to look behind an email and see that it comes from a verifiable source.”

Sometimes the best way to train someone is to show them what phishing emails look like and how convincing they can be. Consider running a phishing simulator such as PhishMe or a similar product.

PhishMe launches a company-wide, fake phishing email campaign, allowing you and your staff to see how many people open the message and click the embedded link or file. When clicked, the link or attachment displays a message explaining that the user has fallen for a fake phishing attack. It shows employees the red flags that were built into the email that can help them identify future attacks.

Extra controls for banking and finance systems

Companies can introduce additional controls for accessing and monitoring critical systems, including bank systems, accounts payable cheque runs and sensitive financial records.

Manning has changed his email system to ensure any emails from outside LMI Group are sent to one inbox, and internal “correct” emails are sent to another. Any payment over A$5000 must also receive a second pair of eyes and verbal confirmation that the request is legitimate.

Segregate responsibilities

Another tip is for companies to segregate approval responsibilities from requesting responsibilities and ensure role changes are reviewed against system permissions. For example, an employee with the ability to set up vendors should never have responsibility for disbursements added to their role.

Dunn advises to always check social media.

“Where you work, who you work for, what your role is – all this information can be exploited,” he says. “I would look carefully at controls on LinkedIn and make sure you know who can see your information.

“Be ever vigilant with all incoming persons. Don’t just click onto anyone who wants to be your friend or colleague. This is the easy pathway in for the smart hoaxer.”


This article was kindly given to us by Adam Courtenay from INTHEBLACK. Please view the original article here.

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