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Crimes against Small Businesses and Prevention Strategies Research Paper

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Updated: May 20th, 2021


White-collar crime in business designates offenses that are committed with the purpose of obtaining financial gain by resorting to a particular form of deception. Generally, they include lying, stealing, and cheating in a business context. The variety of white-collar crimes is limited only by the fantasy of the person who commits them and may include: tax evasion, insider trading, bribery, embezzlement, money laundering, and a long list of other offenses (Shover, Hochstetler, & Alalehto, 2013). This type of crime is typically linked to business people who are involved in a lawful activity and have access to considerable amounts of other people’s money. Generally, such people occupy respectable positions until their illegal actions are discovered (Payne, 2016).

However, it would be a mistake to attribute white-collar crimes exclusively to large businesses where millions of dollars can be stolen. In fact, fraud and theft are even more widespread in small companies as they have much less reliable protective systems. Even a long-trusted bookkeeper, who initially has access to small amounts, can gradually steal a considerable sum of money from an organization (Payne, 2016).

According to the Federal Bureau of Investigation, white-collar crimes cost the United States app. $300 billion annually; a substantial part of these financial losses have to be sustained by small businesses, which suffer indirectly even from crimes committed by public officials (Payne, 2016). Small companies have to pay more taxes because of reduced government revenues–this is another reason white-collar crimes are ruining them and can even lead to bankruptcy when they cannot face an advantage created by a fraudulent capital infusion to their competitors in the market (Shover et al., 2013).

Thus, the paper at hand is going to investigate what strategies can help small businesses prevent white-collar crimes.

Crimes of Fraud by Vendors

Small businesses can fall victims to crimes committed by vendors who contract the company, which is not a rare case. There are several possible scenarios for this type of criminal offense. The first possible situation is that the company purchases a bulk of goods from another company at a considerably lower price (e.g., pens), but when it receives the order, it finds out that these goods are low-quality or do not have all the characteristics of their alternatives (the pens may have the only half amount of ink). According to the second scenario, the company may buy used products (e.g., furniture) in order to save money, but after the delivery discovers that some items are broken or too old to continue being used (broken chair wheels, damaged desks, etc.). Finally, the company can give a deposit for needed supplies, but the vendor disappears for good after the payment (Payne, 2016).

In order to make sure that such situations do not happen, the company can take the following steps:

  1. The leaders of the company can launch a fraud awareness program helping to prevent such crimes. These programs, as well as crime prevention resources, are numerous and can be chosen from.
  2. They can also introduce a policy making it obligatory to receive board approval before any operations are conducted. As a result, more than one representative from the organization will take part in the decision about a new vendor, thereby increasing the possibility of fraud detection.
  3. It is possible to create a policy that would require investigating all new partners of the company before any contract is signed. Such services as Better Business Bureau allow collecting necessary information.

Environmental Crimes

This type of white-collar crime is especially dangerous as it may not only cause financial losses but also lead to legal prosecution if not detected in due time. A business owner may be held liable for the crime of another company without even having any malicious intent to become an accomplice. In some states, this liability is strict indeed and can bring about a lot of negative consequences (Payne, 2016). For instance, if a small business decides to expand or just to move to a new location, it may acquire land from a seller and act according to the initial plan. However, the owner may later discover that there are barrels of dangerous materials underground, which the company is now forced to remove. If this cannot be performed without a side party, another company will have to be hired to clean up the materials. After that, it may easily dispose of them dumping barrels into a river, or a lake, which will soon be discovered by environmental agencies, and the small business possessing the land will be exposed to prosecution (Shover et al., 2013). The only strategy to prevent situations like that is to research all organizations, with which you have to deal in advance and find out whether they were noticed in some illegal activities.

Fraudulent Cash Flow Representation

In times of recession or financial crisis in the country, small businesses often have to face a number of cash-flow problems as their customers opt for delayed payments because of their own financial hardships. As a result, the company starts seeking loans to stay afloat. Yet, when they present their financial picture to all the stakeholders, they usually stretch the truth about the real state of things in order to avoid unrest. At a certain point, this good intention finally transforms into a fraudulent representation (Shover et al., 2013). This crime is referred to as cooking the books and is often committed without any malice like the previous type. The best strategy to avoid it is to be careful about stretching the truth and resort to it only in cases of emergency.

Crimes Committed by Employees

Small businesses may suffer not only from crimes committed by partners or high authorities but also from their own employees who have access to the budget. It is a common cause that a small company has only one bookkeeper, who performs all the job connected with accounting and financial statements–this saves a considerable amount of money on hiring several specialists. Allowing a person to have this power puts the company at risk of laundering, embezzlement, and tax evasion, which may pass unnoticed for a long period of time (Payne, 2016). The crime of this kind usually starts out small, from the theft of $50-100; later, the employee learns to conceal bigger sums. There are two strategies that could be helpful in this case (Shover et al., 2013):

  1. The company must require at least two signatures on all its checks to ensure that more than one employee controls the situation.
  2. The company may hire an independent accountant to conduct an audit on its financials two or three times a year (it does not have to be a certified audit as it is done only for inner purposes). This would make employees less tempted to try cheating.


Although it is generally believed that white-collar crimes can be attributed only to huge corporations and involve millions of dollars, they actually happen to small businesses, too. It is important to take measures to prevent such crimes as they may lead to bankruptcy or even legal prosecution. For this purpose, a lot of different strategies (including all the above-mentioned) can be implemented.


Payne, B. K. (2016). White-collar crime: The essentials. Thousand Oaks, CA: SAGE Publications.

Shover, N., Hochstetler, A., & Alalehto, T. (2013). Choosing white-collar crime. The Oxford Handbook of Criminological Theory, 475-493.

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IvyPanda. 2021. "Crimes against Small Businesses and Prevention Strategies." May 20, 2021. https://ivypanda.com/essays/crimes-against-small-businesses-and-prevention-strategies/.


IvyPanda. (2021) 'Crimes against Small Businesses and Prevention Strategies'. 20 May.

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