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Software company faces class action fraud charges

A California federal court recently ruled that a computer company could be charged with fraud even if the buyer bought their product before the alleged fraud occurred. Two plaintiffs filed a lawsuit against a software company, citing "fraud in the inducement," a term that means lying in order to convince a buyer to make a purchase; the complaint alleged that the company said their product could fix their computer problems. The plaintiffs reportedly want the case treated as a class action lawsuit. However, the courts have not yet ruled either way on that part of the case although it can proceed through the courts.

The two men had to prove that the company made intentionally false promises in order to persuade buyers to purchase their product in violation of California's Unfair Competition statute, which governs many types of business practices and protects buyers.

The plaintiffs alleged that the product fixed problems that weren't even in the computer, and they charged clients for their services. The software company wanted the case dismissed since the buyers did not know the request to fix the computer was present when they bought the software.

The court considered the case and ultimately supported the buyers' arguments that the company used intentional fear when trying to make the sale. The use of "scare tactics," according to the court, showed that the business used intentional deception and also caused the plaintiffs to hesitate about bringing the product back to the store.

When a person or business is accused of fraud, they could face criminal and financial sanctions. The charges can also affect the professional reputation of the business in the community. A white-collar attorney might be able to form a solid defense criminal charges in order to preserve a client's reputation in the community as well as potentially lower the charges.

Source: Cincinnati.com , "Deciding on the chronology of fraud", Jack Greiner, June 08, 2013

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