Fraud is a serious issue, particularly when it comes to the losses that these deceitful acts can cause a business to suffer. There are no businesses that are impervious to fraud taking place. The Association of Certified Fraud Examiners reported that every year in the United States, it is possible for businesses to lose an average of approximately 5% of the gross revenues generated from fraudulent activities. The most vulnerable businesses, as stated in the 2018 ACFE report, are the small and private businesses.
Still, non-profit groups, government institutions, and larger companies are also at risk for fraud. There have been many examples of these types of bigger organizations and companies suffering massive breaches in recent years. Who can forget when Target had a security breach in 2013? Or the massive fraud of today where the United States Secret Service has revealed that acts of fraud may have plundered over $100 billion from COVID-19 relief funds?
How Common is Business Fraud?
The 2018 ACFE report showed the median loss that private companies had endured was $164,000. From 2002 through 2018, 28% of small businesses on average suffered from fraud while bigger companies had a rate as high as 26%. The report also indicated the most common issue that lead to fraud taking place, which was a lack of structured internal controls. In other words, small businesses with fewer resources may be dealing with fraud more so than bigger corporations because they do not have the training to develop protocols in combination with preventative tools to assist their efforts.
When smaller businesses with less than 100 employees reported losses due to fraud, 32% indicated that corruption was at the core of the problem. The same is true for bigger businesses with more than 100 employees where corruption was responsible for 43% of the fraud schemes that took place. Coming in second for fraudulent plots, small companies struggled with honest billing.
If you own a business in California, you have to be prepared that fraud can take place. The costly losses businesses suffer from fraud not only hurt their bottom line but also can hamper operations and degrade their reputation. There are almost unlimited ways that fraud can take place and harm a business such as; employee fraud or scams that take place when goods and services are sold or purchased. It is advantageous for business owners to have a relationship with a Los Angeles business litigation firm should they learn that fraud is happening or has already occurred. It is possible that through fraud litigation, a business may be able to recover injunctive relief, disgorgement, monetary compensation, and more.
Speak with a Los Angeles Business Litigation Attorney Today
The Los Angeles business and civil attorney at the Leiva Law Firm can investigate issues of fraud in your business and take a proactive approach to minimize the bleak consequences your business could be burdened with. The experienced and aggressive team at Leiva Law offers several helpful services to businesses in the greater Los Angeles region so that they can avoid the negative impact that fraud can inflict. To learn more, please call the Los Angeles business litigation lawyer at the Leiva Law Firm to schedule a free consultation at (818) 519-4465.