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Business fraud takes many forms

On Behalf of | Dec 18, 2020 | Commercial Litigation

Business fraud can take many forms. Regardless of the severity of the illegal acts, damage to a company can be catastrophic over the long term. By taking proactive steps, owners can help prevent fraudulent acts and protect their businesses’ bottom line.

Specific types of business fraud include:

Identity theft

Identity theft is a form of fraud that has grown in its sophistication due to cutting-edge technology. Sensitive documents – including financial statements and tax ID numbers – uploaded to hard drives, online, and in various “clouds” that could be subject to “phishing” scams. The stakes are high, potentially impacting operations and staff.

Hard copies of paperwork should be kept under lock and key. Digital copies should be protected with everything from a VPN to complex usernames and passwords.

Payroll fraud

While more common in smaller enterprises, large businesses can also fall prey to payroll fraud. An employee supposedly in dire straits asking for a pay advance could just up and quit without the employer being compensated. Falsifying time cards is also a common practice, as is having someone clock in for them when they are absent from the office.

Prevention starts with background checks during the hiring process. Periodic audits can also uncover fraud. Using a reputable payroll service to track hours and compensation can also provide an added level of protection.

Workers’ compensation fraud

Florida mandates that businesses provide workers’ compensation insurance when an employee suffers an injury or illness while on the job. Fraud can occur when an employee who is hurt away from work claims that the injury happened at their place of employment. Others may outright concoct a story of a job site-related injury or illness that simply isn’t true.

Proving a false workers’ comp claim is challenging. A system where everything is documented and records are accurate are essential, knowing the signs of employees who fake injuries.