Businesses in New Jersey must be careful. There are many companies that conduct business in New Jersey that are not legitimate. These suspect operations can run a fraudulent business practice or scam. Often, this leads to legitimate businesses incurring debts, extending credit and having to file debt collection actions against the fraudulent business. This obviously can be costly in legal fees and may not actually result in a collection.
Here are some business practice tips to avoid extending credit to fraudulent businesses and having to file debt collection actions against them:
Tip #1: Vet the suspect business. If you are going to do business with another business, then you should take steps to properly vet the business. Initially, you can check online and see if the business has a poor BBB rating or poor customer reviews. Check if the business has been sued in the past for past due debts and has judgments against them. Get references and check them out. You can also identify the business owner and perform a background check or obtain a consumer report, if permissible by law. If negative information comes up during your investigation, then this would be an early warning sign that may be this is a business to avoid.
Tip #2: Have a written contract or services agreement. Better yet, have your attorney draft the contract or services agreement. A well-contemplated and legally sound contract or services agreement may prevent the suspect business from taking advantage of you and at a minimum give you an advantage in future litigation.
Tip #3: Do not perform services until you receive payment. Sometimes, depending on the business arrangement, this is not feasible. For example, you may need to advance money for materials – but make sure that the materials are delivered to your site. Generally, you should always try to obtain payment in full prior to rendering services. If full payment is not feasible, then at least try to obtain partial payment. If you cannot receive payment, then obtain the business’s bank account numbers and a document from the bank confirming that there are sufficient funds in the account. Obtaining the banking information is always key.
Tip #4: Consult with a business attorney before entering into a contract with the other business. A thorough discussion with a knowledgeable attorney could save you thousands of dollars by helping you avoid a shady business transaction.
Zack and Chuck are very experienced in business law. We have formed businesses, conducted business negotiations and have litigated business disputes. We understand how difficult it is to run a business and how untrustworthy some businesses can be.
We were once asked to collect a million dollar loan on behalf of a client which involved a fraudulent scam. It turned out that the perpetrator had just been released from prison after doing time for a similar scam. The client did not do anything to check out the borrower, and ultimately the money was transferred by the fraudster overseas, and then the fraudster disappeared. DON’T LET THIS HAPPEN TO YOU! If you need experienced attorneys who specialize in business law or need to collect a debt from a business, then call us today for your free initial consultation.
