Fraud
Fraud is intentional deception for unlawful gain or deprivation of rights.
Fraud is intentional deception aimed at depriving a victim of a legal right or obtaining something unlawfully or unfairly. It can violate civil law, where a victim may sue to stop the fraud or recover monetary compensation, or criminal law, where authorities may prosecute and imprison the perpetrator. Fraud may also be an element of another civil or criminal wrong, even if it causes no direct loss of money, property, or legal right. Its purpose is often monetary gain, but it can also target other benefits, such as obtaining a passport, travel document, or driver's licence.
As a civil wrong in common law jurisdictions, fraud is considered a tort. The key elements generally include intentional misrepresentation or concealment of an important fact, which the victim relies upon to their detriment. Proving fraud in court is often difficult because the intention to defraud is central, and some jurisdictions require proof by clear and convincing evidence. Fraud may serve as a legal defence in breach of contract actions or as a basis for equitable remedies, which can include rescission of a fraudulently obtained agreement, monetary compensation, or punitive damages.
As a criminal offence, fraud takes many forms, from general theft by false pretense to specific categories like bank fraud, insurance fraud, or forgery. The general elements involve intentional deception by false representation, with the intent to persuade a victim to part with property, which the victim does in reliance, and the perpetrator intends to keep. Types of fraud include mortgage fraud, health care fraud, welfare fraud, electoral fraud, employment fraud, visa fraud, mail and wire fraud, phone fraud, and internet fraud. Internal fraud, or insider fraud, is committed by someone within an organization. Commodities fraud involves obtaining currency under a false promise of future asset exchange, or providing falsified information to clients. Detection of large-scale fraud often uses financial data analysis, predictive analytics, and methods like Benford's Law or time-series analysis to surface anomalies and irregular transactions.
- field
- Law
- known_for
- Intentional deception for unlawful gain or deprivation of rights
- civil_remedies
- Rescission, monetary compensation, punitive damages
- criminal_penalties
- Fines, imprisonment, or both
- common_elements
- Intentional misrepresentation or concealment of an important fact, reliance, detriment
Lore & Background
In common law jurisdictions, civil fraud is a tort that requires the intentional misrepresentation or concealment of a material fact, upon which the victim is meant to rely and does rely, resulting in detriment. The burden of proof for fraud is greater than for other civil claims, and some jurisdictions demand clear and convincing evidence. Fraud can also serve as a legal defense in breach of contract actions or as grounds for equitable remedies, including rescission of a fraudulently obtained agreement, monetary compensation, or punitive damages. As a criminal offense, fraud takes many forms, from general theft by false pretense to specific categories like bank fraud, insurance fraud, and forgery. Theft by false pretense requires intentional deception through false representation, with the intent to persuade the victim to part with property, which the victim does in reliance, and the perpetrator intends to keep. Fraud may involve document falsification (forgery), counterfeiting, or identity theft, such as using another’s social security number. It occurs across many media, including mortgage, health care, disability, welfare, electoral, employment, visa, insurance, mail, wire, phone, and internet fraud. The international nature of the web, difficulty verifying identity, and hacker techniques have fueled rapid growth in Internet fraud. Internal fraud is committed by someone within an organization, such as an employee. Commodities fraud involves obtaining currency under a contract promising future asset exchange that never arrives, or failing to register, providing false client information, or executing transactions for personal profit. Detection on a large scale uses financial data paired with predictive or forensic analytics, applying methods like Benford’s Law, descriptive statistics, correlation, and time-series analysis to surface anomalies.
Reader's Guide
Criminal fraud takes many forms, including theft by false pretense, bank fraud, insurance fraud, and forgery. The general elements of theft by false pretense are intentional deception by false representation, intent to persuade the victim to part with property, reliance by the victim, and the perpetrator's intent to keep the property. In the Philippines, fraud (estafa) carries imprisonment from six months to twenty years. The UK's Fraud Act 2006 defines three classes of fraud and provides for up to ten years' imprisonment on conviction on indictment. Detection methods include predictive analytics, Benford's Law, and time-series analysis.
Did You Know?
- Fraud can be committed to obtain a passport, travel document, or driver's licence, not just money.
- Internal fraud, or insider fraud, is committed by someone within an organization such as an employee.
- In the Philippines, fraud is called 'estafa', derived from the Spanish word 'estafar' meaning 'to swindle or defraud'.
- A hoax involves deliberate deception without the intention of gain or materially damaging a victim.
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