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Common Examples of Business Fraud

business fraud.jpgBusiness fraud is a serious issue that can have a significant impact on those affected, including other businesses. According to a survey conducted by PricewaterhouseCoopers (PwC), 45 percent of U.S. organizations have been the victim of economic crime in the past two years. Business fraud occurs when one party uses trickery or deceit in order to obtain value or to gain an unfair advantage over another party. When a business fraud is perpetrated by one business upon another, the financial consequences can be significant. Fortunately, companies that have suffered a financial harm because of fraud can often recover for the losses they have sustained by filing a legal action against the person or party that defrauded them. There are many ways in which a business can be the victim of fraud.

Fraud Perpetrated by Employees or Officers

One common source of fraud against business comes from their own employees or corporate officers. These kinds of frauds can occur in a number of ways, including the theft or misappropriation of assets, overbilling hours, fabricated travel expenses, intellectual property theft, corporate espionage, receipt fraud, procurement fraud, and false workers' compensation claims, just to name a few.

Customer Fraud

Customers can be another source of fraud against a business. Examples of the kinds of fraudulent activities in which customers may engage include using stolen credit cards to purchase goods or services, writing bad checks, switching price tags, attempting to return items that were not purchased at a particular store, or filing fraudulent legal claims against a business.

Contractor Fraud

Many businesses use contractors to provide goods or perform services. Contractors may attempt to defraud a business by charging for work not performed, overbilling, accepting kickbacks, failing to provide the agreed-upon product, or simply not delivering the ordered goods. These kinds of frauds can be difficult to detect as businesses do not control the way in which a contractor performs the service or provides the goods for which the contractor was engaged. For this reason, business owners should always be vigilant in ensuring that the work performed by a contractor is in accordance with the agreement into which they entered.

Criminal Proceedings Are Distinct from a Civil Suit

Importantly, any criminal proceedings initiated against a fraudster that impacted a business are completely separate from a civil lawsuit through which a business could recover for the losses it sustained as a result of the fraud. In order to seek compensation, the business must initiate a legal action in state court alleging fraud, which is why it is highly advisable for businesses that have been the victims of fraud to discuss their options with an experienced lawyer.

Contact a San Jose Business Litigation Attorney Today to Schedule a Free Consultation

Business owners or corporate officers that believe that their company has been affected by fraud should contact an attorney immediately. The skilled San Jose business fraud lawyers of Diemer, Whitman & Cardosi, LLP are dedicated to representing the rights of businesses both alleging fraud and those that have been accused of fraud. To schedule a consultation with one of our lawyers, call our office today at 408-971-6270.

Sources:

http://www.dir.ca.gov/dwc/faqs.html

http://www.pwc.com/us/en/forensic-services/assets/economic-crime-survey.pdf

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