Actions to Take If Your Business Partner Is Accused of Fraud

In 2020, the Federal Trade Commission (FTC) received over 2.1 million fraud reports from consumers. Impostor scams were the most common type of fraud reported to the agency.

As online shopping activity surged during the pandemic, the same thing happened to scams. In fact, online shopping was the second-most common fraud category reported in 2020. Specific examples include online prizes, sweepstakes, and lottery scams.

Basically, it’s when an online shop claims to offer prizes (often cash) to consumers who would join a raffle or purchase sweepstakes or lotto tickets. They might encourage consumers to gamble more money for higher chances of winning, only to run away when a winner has finally been chosen.

Consumers reported losing more than $3.3 billion to these scams last year, a significant increase from $1.9 billion in 2019. If your business has been involved in such a crime, but you know no such thing, and your retail store is legitimate, here’s what to do:

When Your Business Partner is Accused

Business partners are meant to share their talents and resources. However, due to certain circumstances, some partners may lose sight of where their loyalty belongs. They may grow greedy or desperate to resolve a problem, tempting them to steal from your business or use your business’ name to steal money from customers.

If you receive a complaint about a customer claiming to have been scammed, in which they’re accusing your business partner of the perpetrator, start investigating immediately. To prove fraud, the accuser must present evidence that your business partner knowingly lied. The accuser must also prove that they reasonably fell for that lie and were harmed because of it. If you have reason to distrust your business partner and thus sided with the accuser, you must also present evidence on why your business partner is untrustworthy.

Understanding Fraud

There are various types of fraud, and fraudulent activity can either be a state or federal crime, or both. This means that a person can be charged with fraud that violates both state and federal laws and thus can be prosecuted for both.

For a fraud committed under a business’s name, the type of fraud would be an online shopping scam. Scammers usually create fake retailer websites to set up payment methods that wire the money straight to them. For example, a legitimate online store usually offers credit card, bank transfer, and cash on delivery as payment methods. On the other hand, a fraudulent online store typically charges via money order, pre-loaded money card, or wire transfer. Customers who send money this way will have no way to refund their cash once they realize they’ve been scammed.

A newer version of fraud involves using social media to set up a fake online store. The scammer would open the store for a short time, offering expensive products like designer bags or jewelry. Once they’ve made a sufficient number of sales, they take down the page and run off with their customers’ money.

Online shopping scams count as wire fraud, which covers a wide range of fraudulent activities. It uses phones, electronic communication, or computers as a platform for committing a crime. Wire fraud is a federal crime. It is typically charged as a felony offense, though misdemeanor is possible in some situations.

Possible penalties for federal fraud are incarceration, fines, restitution, and probation. Imprisonment for fraud can last from 0 to six months or 20 to 30 years per violation. The fines for any conviction of a federal fraud are steep, going up to $250,000 per violation. If restitution is ordered, the perpetrator must pay the complainant to compensate them for their losses. And lastly, probation can allow the accused to serve no prison time, but they must report to the court or probation officer regularly.

Is It Bailable?

A person charged with a crime typically undergoes a bail hearing. The amount of bail is decided by a judge. The judge may deny bail if the crime is violent or astronomical in scale or if the accused seems likely to flee.

Nonviolent misdemeanors could have a bail of just $500, while felony crimes go up to $20,000. If you’d like to help your business partner through their bail hearing, you can consider appealing for a bail bond. Bail bonds are only available in the U.S. and the Philippines. It serves as a surety that the accused will appear for trial.

If your business partner has been found guilty, their crime will surely taint your business’s reputation, even if they committed the crime for their own benefit only. Hence, you can cut your losses and dissolve your business partnership, and start anew. You can still be a friend to your business partner even if you’re not working together anymore. Besides, your separation is for your best because you shouldn’t partner with someone who has broken your trust.

Share this post on

The Author

Scroll to Top