Question

How does white collar crime impact small businesses? Give examples.

Answer 1

White collar crime means the fruad or crime done by the importance position holders of the business. It is done by white collared people of business. It can be of any type like bribery , copyright , theft , labour racket activities , cybercrime etc.

White collar crime effect small business in the following ways-

1) Payment of huge fines - when the business or an employee is found doing a crime , investigation will be charged and the employee will be entitled to pay high fines effecting the financial position .

2) Legal problems - If he employee or business is found fraudulent , then it must cooperate with the authorities , otherwise they will face a charge by government for not cooperating with authorities.

3) Reduction in profits - The fines and charges are not only the matters which will effect the financial position of the business but some frauds directly linked with money like theft of money , embezzlement or obtaining money by force can also result in reduced profits of business.

4) Effect on reputation of business - The crime by a single person will effect the profits as well as the Reputation of the business. As soon as the fraudulent activity of business came into the knowledge of public , it will effect the reputation of business in long run.

Examples how different white collar crimes may effect the business are -

1) Embezzlement - It is an act where the person in charge or holder of money in business , hides the money for his personal benefit. This level of crime is most done at the time of maintaining accounts or bookkeeping. Retail or employees in restaurant can also do this crime.This will effect the financial position of the business.

2) Identity theft - When a person hides his true identity and uses the identity of other person to make profit it is called identity theft. This means using other person's personal information like bank details, passwords , phone number or e-mail id's. This may create a high risk for business.

3) Insider trading - In this , the person trade in stocks in an illegal way by using the secret information of the business which is otherwise not available to them.Once the business or an employee is found dealing in insider trading , it will effect the reputation of the business because the other users will not be able to trust the business again.This will effect the business working.

4) Bribery - It is an act of giving some valuable thing to the other Person in expectation of some beneficial return from him. If an employee of business is found dealing in bribery , it may effect the reputation of the business.

5) Labor racketeering - If a white collar employee uses the labor union in an illegal manner by fraudulent ways for their personal benefit it is called labor racketeering. If the whitr collar people of business uses the lower level for their benefit in an illegal way , this would break their trust and it would be difficult for business to gain again even in long run.