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Types of Business Fraud and How to Prevent Them from Happening

Fraudulent business practice is a serious issue that can harm your business or even completely shut it down. It’s also an illegal practice that can lead to major jail time for whoever is caught committing it. These practices can harm a company regardless of how big or small it is. Business fraud can occur when an organization or members of an organization commit illegal acts for financial gain. In today’s blog, we’ll discuss some different types of fraud companies face and how to prevent them.

Payroll Frauds

This is a problem that mostly affects small and medium-sized organizations, but it can happen anywhere. Payroll fraud occurs when employees either take advanced payments and without adjusting them in their payroll or lie on their timesheet to increase their pay hours. The best way to deal with payroll frauds is to create a payroll service that can monitor employee timings hours before the pay is given out.

Fake Invoicing

This type of business fraud is mostly done by sales or finance teams. Creating fake invoices for products or services that an organization did not receive or adding more money on top of an actual invoice allows individuals to steal money directly from the company. Most commonly, either a fake service provider is created or the employee, indulging in the fraudulent activities, partners up with a corrupt service provider. The best way to avoid this is to create a quality control system where goods and services are cross-checked, and suppliers are vetted before being approved.

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False Insurance Claims

Organizations that cover workers compensation may find that some of their employees are trying to profit off of the insurance money by faking injuries or illnesses and making false claims. This can increase insurance premiums and lead small companies to lose money. The best way to avoid this is to cross-check documents for insurance claims and keep track of medical reports and receipts.

Creating systems and legal checks that can weed out fraudulent behavior is the ideal step forward. But if the fraud has already been committed, connecting with business law attorney San Diego is the next best step. Our team at Top Performance Legal can help you deal with various fraudulent business disputes. Get in touch with our business litigation lawyers San Diego today!