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Insights

How to protect against litigation fraud

Posted on 04th June 2020 in Parks

Posted by

Leah Joyner

Paralegal
How to protect against litigation fraud

Fraudsters and other con artists employ ever more intelligent tricks to get their hands on money, by threatening legal action for alleged non-payment of invoices or illegal use of copyrighted materials.

Clever tactics and the advancement of technology have meant it is increasingly easier to make false claims against business owners, and therefore becomes much harder to determine what is a legitimate claim and what response is needed.

The Parks industry is not immune to false claims and litigation fraud, as shown in the notable cases summarised below.

 

Case1

A member received a call from an individual claiming to be a court bailiff. The individual explained he was calling from the local court and gave details of a claim made against the member’s business. The claimant had apparently secured a court judgment in the sum of £1,500. Bailiffs would be attending his business premises within 48 hours to recover money or goods to the value of the judgment (plus additional bailiff’s costs) unless he paid in full. The member in question was very concerned and promptly paid, in full settlement of the debt.

 

How to tell that this is fraud

It is the bailiff’s job to enforce an order of the court if the defendant fails to comply with its terms. The most common court order is a County Court Judgment or Judgment Order, requiring the defendant debtor to pay the claimant specified sums, plus costs.

Before a Judgment Order can be made, a claimant must make out his/her claim through the formal court claims process. The defendant should have heard from the Claimant before this process begins but if not, will hear from the court at the point the claim is issued, and in the event of a lack of response from the defendant, when a Judgement Order is made.

It is very unlikely that a claim would reach the point of enforcement by a bailiff without the defendant’s knowledge and even if it did, the defendant should not consider settling a judgment order without first having sight of it and querying the claim with the court directly. If the claim is legitimate but you have had no prior knowledge of it, we suggest you take legal advice as you may be able to have the judgment set aside, allowing you an opportunity to defend the claim if you wish to do so.

 

Case 2

One of the most common claims we hear about on the Member’s Helpline concerns business listings, either in published directories, electronic directories or on websites. Documents from trade directories can appear 'official-looking' asking you to provide or confirm your website, email and other contact details. These often look like simple requests inviting a free listing but the small print can commit you to pay hundreds of pounds for an entry. The listing in the directory is generally worthless.

 

How to tell that this is fraud

It is always worthwhile to read the small print on any official business documentation, as well as check to see if it looks official. Clear signs it may not be are low resolution logos, spelling or grammatical mistakes, unofficial contact details. It is also worth researching the company to see if they have a website, reviews or are registered on Companies House.

 

Case 3

The simplest and most blatant scam is that, without any prior contact, bogus invoices are sent to businesses. These invoices might be for adverts in fictitious publications, or for goods that did not exist, or for any other fictitious service. This is a very crude hit-and-miss approach but a surprising number of victims pay the invoice without question, particularly if the amount involved is relatively small.

 

How to tell that this is fraud

Ask other members of your organisation if you have had any prior contact with this business. It is also worth checking the letter or email for common signs of a bogus invoice, such as low resolution logos, spelling or grammatical mistakes, unofficial contact details and business details.

 

CASE 4

This case does not necessarily concern fraudulent activity on the part of the claimant, but it is still a common trap that business fall in to. The first thing to say is that material which is not copyrighted is free to use. If you are satisfied that you are not infringing copyright law then resist any copyright claim by the creator/author or their representative. If you unwittingly use copyrighted material without permission, then expect to receive a claim that you pay the licence fee retrospectively or face legal proceedings. Offers to remove content will not usually be accepted as an adequate remedy. You will still be required to pay a fee. Most material will indicate if it is copyrighted but if you are not sure, you should make enquiries before you publish the material.

 

To find out more information about litigation fraud and how to identify it please visit our hub page. If you need advice about suspected litigation fraud, or a previous case, then our specialist team will be happy to help.

Contact the team

Company & Industry

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