Understanding Business Fraud
South Florida business owners have more frequently had to protect themselves against the perils of fraud. In all types of industries, business fraud can destroy viable and reputable businesses and jeopardize the public’s trust. Understanding what constitutes business fraud and how to protect businesses and individuals is key to avoid being a victim.
Business Fraud Defined
Under Florida law, there are several types of fraud. The elements of business fraud are:
- A false representation of fact;
- Made by another;
- With knowledge that the representation was false when it was made;
- With an intention to induce another to act or refrain from acting in reliance on the representation; and
- Damages resulting therefrom.
Some of the most common forms of business fraud that affect business owners are insurance fraud, investment fraud, embezzlement or other employment-related fraud, business tort claims concerning trade secrets or other intellectual property rights, breach of fiduciary duty, unfair or deceptive business practices, and tortious breach of contract. Business fraud cases are mostly tried in federal court. However, victims of business fraud can bring a civil suit for restitution. Consumer fraud is currently very prevalent. A recent article named South Florida as one of the leaders in the U.S. for fraud and identity theft, though those numbers are on the decline.
Business fraud covers a broad range of crimes. In order to prove fraud, all of the key elements must be present, and the best way to protect your business is to be vigilant about the type of fraud you may be more likely to be subject to. The best way to recognize what may apply in your case is to hire an experienced attorney.
How to Protect Yourself From Business Fraud
Florida statutes provide a penalty for every kind of fraud. There are some defensive measures available depending on whether the fraud occurs internally or externally. Internal fraud occurs when employees or partners within the company commit fraud. Some examples of common types of internal fraud include theft of assets and accounting frauds and fraudulent worker’s compensation claims. External fraud usually involves at least one outside individual. Customers who use stolen credit cards to buy merchandise, file fraudulent injury and liability claims, and write bad checks commit external fraud. There may not be a way to prevent exposure to every kind of fraud, but there are measures that can make your business less vulnerable. A few safeguards against internal fraud are conducting background checks on every employee, enforcing company policies and procedures, (including ethics training) and performing proper due diligence on potential hires responsible for handling finance and accounting. For external fraud, insuring the business and using a secure IT network are just a few ways to protect your business.
Contact a Business Fraud Attorney
If you believe you are the victim of business fraud, or want to learn more about a specific kind of business fraud, you should contact an attorney. The West Palm Beach attorneys at Pike & Lustig, LLP can help in all matters related to business and consumer fraud.