What to Do if Your Small Business Falls Victim to Fraud?

Fraud schemes

What to Do if Your Small Business Falls Victim to Fraud?

Discovering that your small business has been defrauded can leave you feeling embarrassed, helpless, and humiliated. Fraud schemes are so prevalent that the FBI has categorized them into four types: Common Fraud Scams, Investment Related Scams, Internet Scams, and Senior Citizen Targeted Scams, all of which can target both individuals and businesses.

Legally, fraud occurs when someone makes a false statement about a material fact, knowing or should have known it was false, with the intention of inducing the other party to act on it, resulting in damages for the other party. Small businesses can fall victim to fraud from various sources, including vendors, suppliers, creditors, customers, employees, and even business partners.

If you or your business has been defrauded, there may be an opportunity to recover damages from the responsible party. You can recover either the “out-of-pocket” loss or the “benefit of the bargain” loss in a fraud action. Out-of-pocket costs refer to the actual amount of money lost, while benefit-of-the-bargain damages refer to the amount of money you would have received if the promised goods or services had been delivered. The goal is to provide the most comprehensive compensation for the injured party.

Additionally, if you or your business is experiencing ongoing harm, such as loss of business, reputation, or other damages due to fraudulent misrepresentations, you may be able to obtain a court-ordered injunction to prevent the responsible party from causing further harm. Seeking an initial temporary injunction hearing can be a crucial step in protecting your business’s interests.–

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