There are many different types of business fraud. The essential element in all of these is an illegal or fraudulent business trying to rob you of your hard earned cash. There are many different categories of fraud for which you need to file a report. These include:
- Corporate Service Fraud
- Institutional Investment Fraud
- Business Trading Fraud
- General Business Fraud
- Other Types
Corporate Service Fraud
Corporate Service Fraud is a category of frauds where the business leverages unfair or fraudulent means through the services it renders. Some aspect of its transaction with the client forms the core of a fraud. The most common type of corporate service fraud is payment fraud. In this type of business fraud, fake payments are created or diverted. Examples comprise creating fake records, bank accounts and more where fraudulent payments will be made to self. Other steps involve intercepting and altering payee details, and amounts on the checks and other forms of payment order and working to bank these payments. False claims by accomplices for later repayments are also a likely in a payment business fraud.
Institutional Investment Fraud
Institutional investment fraud refers to a business fraud category, where investors are duped of their money by legal sounding scams. The most well known of these frauds is the pyramid or Ponzi scheme. Named after Charles Ponzi, a 1920s swindler who invented the scheme, it involves getting investors to pay up and then, investments of those later is used to pay the earlier ones forming a pyramid. The success of the scheme depends upon giving the appearance that the investment is dramatically rising, when none of this is true. These type of frauds were made popular by Wall Street investor Bernie Madoff who duped people of USD 65 billion in recent times. Business fraud involving investment is most common at the start of recession, when investors seek to remove money from the scheme, leading to exposure and collapse.
Business Trading Fraud
This type of fraudulent activity involves the allegedly legitimate business to set up a scheme with the sole intention of defrauding investors, suppliers and customers. This may often take place after the business has developed an excellent reputation and credit history through long term fraud. Another situation is when the apparent business has been operating for only a few months and this is called short term fraud. The latter is often online or internet related fraud.
General Business Fraud
This is when a business fraud is perpetrated involving insolvency and bankruptcy mostly. Insolvency related fraud takes place when a company is fraudulently trading and it often takes place just before anticipated insolvency of the firm. Shadow directors may be setting up hollow companies after their first firm, just to take assets from the latter and avoid paying debts at the same time. Liquidators and creditors can take action against these corporate fraudsters.
Other Types
Other types of business fraud include intellectual property theft and counterfeit goods fraud, insurance specific fraud, banking and credit frauds, telephony and gambling frauds.
