How to Report a Business Fraud

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Business fraud can be very costly to the victims.
Business fraud can be very costly to the victims. (Image: green money image by Maxim Kulemza from <a href='http://www.fotolia.com'>Fotolia.com</a>)

Business fraud is widespread, involving everything from a contractor who takes a deposit for a home repair and then disappears, to a no-risk-guaranteed offer on the Internet, to a deceptively advertised product or service. This is an area where prevention is definitely the best remedy, but even the most cautious consumer can be fooled. People who have been scammed are often too embarrassed to report the fraud. However, reporting not only gives you a chance of some recovery, it puts the business on notice and alerts local and government agencies. It also allows other consumers to know that complaints have been made about the business.

File a complaint with the Better Business Bureau. The agency suggests that you try to resolve your complaint with the business first, but does not require that you do so, nor does it require that the business you are reporting be registered with the BBB. The bureau says more than 70 percent of the complaints filed with it are resolved, and it may offer mediation to assist you. You can file a complaint by going to the BBB's website at http://www.bbb.org/us/consumers/. The agency will review your complaint and, if it is accepted, get in touch with the business to ask it to respond. This puts in motion the process by which you could recover some of your losses. Regardless of whether you recover, if the BBB accepts your complaint and deems the business's answer inadequate, the complaint remains on record with the bureau, and other customers who check with the BBB will know that there is an unresolved complaint against the business.

Contact a government agency, several of which are set up to accept fraud complaints against businesses. The Federal Trade Commission is concerned with fraud committed by telephone, the Internet and the mails. It collects information about frauds and reports to local law enforcement agencies. You can contact the FTC by visiting www.ftc.gov or calling 1-877-FTC-HELP. The FBI also looks into Internet fraud. Its website at http://www.fbi.gov/majcases/fraud/internetschemes.htm contains a list of common Internet frauds and advice on how to avoid them. You can file a complaint with the Internet Crime Complaint Center, which is a partnership of the FBI, the National White Collar Crime Center and the Bureau of Justice Assistance. You can file a report at http://www.ic3.gov/complaint/default.aspx. The Internal Revenue Service is interested in real estate/mortgage fraud, abusive tax schemes, health-care fraud, insurance fraud and several other kinds of business fraud. Report business fraud to the IRS by completing Form 3949-A online or downloading it and mailing it to Internal Revenue Service, Fresno, CA 93888. You can find your local IRS office by going to http://www.IRS.gov/localcontacts/index.html.

Report fraud to a referral agency. If the business that defrauded you uses a referral agency such as Service Magic to find customers, you can report the fraud to the agency, which will investigate the complaint and try to help you resolve it with the business. If it cannot be resolved, some agencies will compensate you for some of the money you have lost as part of their guarantee to consumers who use those agencies.

Tips & Warnings

  • There are dozens of nongovernmental websites that solicit reports of business fraud. Check out these sites before sending them any information or money. Get references that you can check. Verify the names with the Better Business Bureau. Make sure the sites have working call-back numbers. Check the numbers by searching for the businesses' names on the Internet and seeing if the numbers come up, or by calling information.

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