Types of Business Fraud
We expect all businesses to operate scrupulously, but unfortunately, that does not always happen. Fraud is a common issue, with companies taking advantage of employees and customers. It can happen in many ways, but the common theme is that someone is taking money from someone else.
As a business owner, you need to put preventative measures in place. As a consumer, you need to be wary of scams. In any case, here are some types of business fraud to look for.
This can be executed by payroll departments as well as employees. Those who work in payroll may use the system to pretend they are paying someone, and then pocket the money. An employee could also submit a false timesheet showing more hours than what they actually worked in order to receive higher pay. Payroll fraud may also involve paying someone unauthorized bonuses. A person outside the company could also hack into the payroll system and take money for themselves.
This is the most common type of fraud perpetrated by employees, likely because it’s often the easiest one to commit. Misappropriation of assets simply means stealing from an employer.
There are two categories of this type of fraud:
- Cash misappropriation. This means stealing money directly from the company, which could include taking money from a cash register or safe, transferring funds from company bank accounts, or making unauthorized purchases on a company credit card.
- Non-cash misappropriation. This refers to stealing non-cash assets from the company. This could include taking office equipment or supplies without permission.
Tax fraud is common among larger companies that earn millions or billions of dollars annually.
The problem with making too much money is that a company will have to pay more in income taxes. Business owners may engage in tax fraud by downplaying their business’s earnings or claiming false deductions by lying on their tax returns. Some companies may even engage in tax evasion, which means avoiding paying taxes altogether.
Identity theft is when someone steals personal information from another person in order to commit fraud. A business can commit identity theft by stealing bank account information or other personal data from its customers. Businesses can also be attacked through data fraud. This personal information could be used to open a new line of credit, make purchases with a credit card number, or commit crimes under a false identity.
Corruption can involve different types of business fraud. It often happens at larger corporations when business owners seek to make as much money as possible, whether or not it is legal.
Corruption can mean any type of dishonest behavior. Some examples include:
- Money laundering.
- Accepting bribes.
- Making unreported transactions.
- Conducting business dealings with criminals.
Seek Legal Help
Businesses are not always on the up and up. Some engage in unethical and even illegal activities such as fraud.
Whether you are a business owner or consumer, Fort Lauderdale business torts lawyer Edward J. Jennings, P.A. can help you deal with a company’s fraud issues. We can provide advice and representation at all stages of litigation. To schedule a consultation, call 954-764-4330 or fill out the online form.