Business & Consumer Fraud

Business fraud refers to illegal activities carried out by an individual or company in an untrustworthy or unethical manner. This type of business fraud is frequently intended to benefit the perpetrators either individually, or corporately. 


What Exactly Is Corporate Fraud?

Business fraud refers to illegal activities carried out by an individual or company in an untrustworthy or unethical manner. This type of business fraud is frequently intended to benefit the perpetrators either individually, or corporately.   Corporate fraud schemes are distinguished by their complexity and economic impact on the company, other employees, and third parties.

When businesses engage in dishonest or illegal activities, this is referred to as corporate fraud.

Corporate fraud can take many forms, including falsified accounting and misrepresenting services or products.
The Enron scandal, which occurred in 2001, is a well-known example of corporate fraud.


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How Corporate Fraud Operates

Corporate fraud can be difficult to detect and prevent. A company can limit the extent to which fraud can occur by implementing effective policies, a system of checks and balances, and physical security. Corporate fraud is a type of white-collar crime.

Corporate Fraud Types

Though business fraud can be committed in a variety of ways, it is frequently committed by obtaining confidential information or gaining access to sensitive assets and then leveraging those assets for profit.

To conceal illicit activity, the fraud is frequently hidden behind legitimate business practices or exchanges. The involvement of multiple stakeholders in corporate fraud allows for elaborate fraud schemes to be protected by a group of complicit actors.

For example, a company’s financial accounting records may be manipulated to present a rosy picture of high revenue and profits when compared to actual financial results. These actions may be taken to conceal flaws such as a net loss, slow revenue, declining sales, or large expenses. Falsified accounting may be done to make a company more appealing to potential buyers or investors, or to protect a public company’s stock or valuation from falling.

Other types of corporate fraud may seek to conceal or misrepresent a service or product that the company is developing or has in service, thereby concealing flaws or defects. Rather than investing in repairing, refurbishing, or redesigning the product, those in charge try to deflect or disguise these flaws. This may be done if the company lacks either the funds or the will to correct the problem or if disclosing the problem may drive away customers and investors.

If a company or individual claims to be putting some of its funds into investments or other types of monetary reserves with the intention of increasing its value, but those funds are spent or diverted elsewhere, this is a type of corporate fraud.

Business Fraud Example

Corporate fraud can be seen in the deceptive accounting and business practices that led to Enron’s demise. Due to the widespread use of loopholes and other deception tactics, the company concealed debt from failed transactions totaling billions of dollars. To keep the charade going, those in charge put pressure on their auditors to conceal their deception, which included destroying financial documents.

Business Fraud can take many forms.  Below is a partial list of corporate fraud practices that we can litigate.

  • Financial Statement Manipulation
  • Securities Fraud
  • Insider Trading
  • Pyramid Schemes
  • Ponzi Schemes
  • Money Laundering
  • Pump and Dump Scams
  • Racketeering
  • Mortgage Fraud
  • Wire Fraud

Consumer Fraud

When a person suffers a financial or personal loss as a result of someone else’s deceptive practices, it is consumer fraud. The use of deceptive, unfair, misleading, or false business practices can constitute fraud. Fraudsters typically prey on seniors and college students, but all consumers are vulnerable to fraud.

COVID-19, and a wealth of natural disasters has spawned an entire cottage industry of con artists who prey on your fears and financial insecurity.

Here are some of the most common consumer frauds.

  • When a person suffers a financial loss as a result of deceptive, unfair, or false business practices, this is referred to as consumer fraud.
  • Thieves steal your personal information, assume your identity, open credit cards, bank accounts, and charge purchases with identity theft.
  • Mortgage scams target distressed homeowners in order to steal money from them.
  • Credit and debit card fraud occurs when someone steals your card information and uses it to make purchases or make offers to lower your credit card interest rate.
  • False charities and lotteries take advantage of people’s sympathy or greed.
  • Debt collection fraud attempts to collect on unpaid bills, whether or not they are yours.
  • COVID-19 scams are a new type of fraud that takes advantage of your fear or financial need.

Identity Theft

Identity theft occurs when someone steals your personal information, which can include your name, Social Security number, bank account number, and credit card information. This is often accomplished through data mining.

The thieves’ goal is to use your personal information to impersonate you in order to access your bank account and drain funds, open and use credit cards in your name, take out loans, use your health insurance to pay medical bills, and file a tax return in order to collect your refund.

Mortgage Fraud

Every year, the FBI investigates thousands of mortgage fraud cases. According to the FBI’s Financial Institution Fraud Unit, today’s mortgage scams frequently target distressed homeowners. These scams include, among other things, foreclosure rescue schemes, loan modification schemes, and equity skimming. They are frequently carried out by real estate and mortgage professionals who take advantage of their specialized knowledge and authority.

Credit and Debit Card Fraud

Credit or debit card fraud occurs when someone steals or finds your card or obtains the card’s information in order to purchase goods, withdraw cash, or otherwise use your card fraudulently. You should be aware that the Fair Credit Billing Act limits your liability to $50, and depending on the bank or credit card issuer, there may be no cost at all.

Deceptive Interest Rate Reduction Robocalls

According to the FTC, robocalls that “guarantee to reduce your credit card interest rate” are a relatively new twist on credit card fraud (for a fee). These kinds of offers are usually scams, and they are no more effective at getting credit card companies to lower your interest rate than calling the company yourself for free. In addition to charging a fee for a service that does not exist, some of these con artists request personal information, which they then use to commit identity theft.

Fake Charities

According to the Federal Trade Commission, fake charities use the same techniques to steal your money that legitimate charities use to raise funds (FTC).  Make sure you understand where your money is going before you donate.

Prize and Lottery Fraud

Prize and lottery fraud goes by a variety of names, including sweepstakes, drawings, foreign lotteries, and others. This type of scam frequently targets the elderly and begins with a phone call or a postcard. Every year, the FTC receives tens of thousands of complaints about prize and lottery fraud. Because many victims do not report being scammed, officials believe the scope of the problem is far greater.

Debt Collection Fraud

Scammers impersonating collection agencies call consumers and demand payment for fictitious outstanding debts. These are not authorized debt collectors. You also have rights if you have an actual unpaid debt that is being collected. The Fair Debt Collection Practices Act outlines these rights (FDCPA).

COVID-19 Scams

The coronavirus pandemic and the resulting hastily passed government legislation, have created opportunities for scammers to enter the scene and take advantage of people’s fear and financial need.  Many of these scams are not dissimilar to what we see immediately after any natural disaster from forest fires to hurricanes.

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