What are the Most Common Frauds in Small Business?

Some people will tell you that, in order to succeed in business, you need to bend the truth and know when not to show all of your cards, but there is a difference between skillful sales banter and business fraud. Because they are in control of substantial amounts of money, businesses are easy targets for white-collar crime. It is not just big corporations; small businesses often suffer financial losses because of fraudulent dealings by employees, vendors, and scammers.  

Meanwhile, for someone to be convicted of defrauding a small business, the prosecution must prove that the defendant knowingly made false statements to representatives of the business and intentionally caused them to suffer financial losses. In other words, you are not guilty of business fraud if you caused a small business to suffer financial losses due to a mistake or misunderstanding. If you are being accused of defrauding a small business, contact a Whittier white-collar crimes lawyer.

Embezzlement by Employees

The crime of embezzlement occurs when an employee steals money from his or her employer or diverts company funds for the employee’s own personal use. Embezzlement can take many forms, including the following:

  • Pocketing money from cash transactions instead of depositing it in the cash register
  • Charging clients a higher price for services than what the employer authorized and then pocketing the difference
  • Taking payroll advances and not paying them back
  • Setting up shell corporations and billing the company from them under false pretenses

Phishing Scams

Phishing is an attempt to get the victim to reveal information that the phisher can use for their own financial gains, such as bank account numbers, email passwords, and social security numbers. Phishing scams almost always take place through email. When small businesses are the target of phishing scams, the scam emails often take the form of fraudulent advertisements for small business loans or fraudulent invoices purporting to come from vendors with which the business already has a relationship. Phishing scams can lead to the theft of data that can cause financial losses not only for the business itself but for many of its employees and clients. The business can be liable for the losses suffered by clients who were targets of identity theft due to the phishing scam.

Vendors Who Ghost You

Another type of small business fraud occurs when a vendor requests and receives payment in advance for products or services and then does not provide these services. The vendor often delivers the first few orders on time before accepting payment for a big order and then ghosting the company without delivering.

Contact the Law Offices of Omar Gastelum About Defending Yourself Against Charges of Business Fraud

All defendants in criminal cases have the right to representation by a lawyer. A white-collar crime defense attorney can help you if you are facing charges of business fraud, identity theft, or embezzlement. Contact the Law Offices of Omar Gastelum and Associates APLC in Whittier, California to set up a consultation.