Business fraud claims can significantly impact an organization, damaging its reputation and financial stability. There is no such thing as taking these claims too seriously, and it is important to address them quickly.
Under Texas law, fraud involves false representations or deceit that result in harm to another party. Defending against such claims requires a thorough understanding of the legal elements and strategic action to protect the organization.
Understanding fraud claims
In Texas, for a fraud claim to succeed, the plaintiff must prove that the defendant made a false statement with the intent to deceive and the plaintiff relied on that statement to their detriment. This can entail misrepresentation, failure to disclose information or making false promises. Often, these claims arise in situations like contract disputes or business deals where one party feels misled by the other.
Gather and preserve evidence
One of the first steps in defending against fraud claims is comprehensively gathering relevant evidence, including:
- Emails
- Contracts
- Records of conversations
- Financial documents
Preserve all documentation from dealings to show that your organization acted in good faith. Demonstrating that the organization communicated openly and clearly can help refute the accusation of intentional deception.
Challenge the intent
Texas law requires the plaintiff to prove intent to deceive. A strong defense can involve demonstrating that any miscommunication or misunderstanding was unintentional. For example, if the allegation stems from a mistake or misinterpretation of information, you can argue that your organization had no intent to deceive the other party. Proving that all actions were in good faith can weaken the fraud claim.
Prove reliance was unreasonable
Another defense is to argue that the plaintiff’s reliance on the alleged misrepresentation was unreasonable. If the plaintiff failed to verify the information or acted negligently in relying on it, their claim may be weaker. This defense focuses on the idea that the plaintiff had a responsibility to investigate and not rely blindly on your organization’s statements.
Fraud is a rampant problem, with the FTC stating that 2.6 million consumers reported business-related fraud in 2023. Organizations that respond quickly and strategically to such claims can competently protect their interests.