Fraud is a criminal or unlawful act of deception which is carried out with the intent to secure financial gain, such as property or money. Fraud may be both a civil tort and a criminal offense.
This means that an individual who commits fraud may be sued for damages in civil court as well as tried and sentenced in a criminal court. Whether fraud cases end up in criminal court or civil court depends upon the party who is filing the action and the type of act which was committed.
Another distinction between civil fraud cases and criminal fraud cases is that a civil fraud lawsuit requires a plaintiff to show that they suffered actual damages. In a criminal case, in contrast, a prosecutor is required only to prove that the defendant intended to and attempted to commit fraud, not that actual damages resulted from the criminal act.
When a private individual or private party sues another individual or entity for damages in court, it is typically due to the perpetrator of fraud either negligently or intentionally misrepresenting a fact which caused the private party harm. For example, an individual may sue a real estate broker for fraud if the broker had a fake real estate license, breached their broker agreement contract, or intentionally made a misrepresentation regarding their credentials, in a listing, or about a specific parcel of property.
In this example, if the plaintiff is able to prove that the broker committed fraud, then the plaintiff may be able to recover a monetary damages award to compensate them for their losses which resulted from the fraudulent actions of the broker. In contrast, when fraud is charged as a criminal offense, it typically applies to a specific type of fraud, such as:
- Credit card fraud;
- Mail fraud; and
- Identity theft.
A state may exact its own criminal law statutes which provide when illegal acts should be classified as a fraud offense. Therefore, the elements of proof and the requirements for criminal fraud charges may vary based upon the crime which was committed and the jurisdiction in which the case is located.
Unlike civil lawsuits, a local prosecutor will be the individual who files charges against the perpetrator of the fraud. To obtain a conviction, a prosecutor will be required to prove the elements of fraud beyond a reasonable doubt.
If the defendant is convicted of fraud, they may be required to serve time incarcerated, pay criminal fines, or be put on probation.
What is Criminal Fraud?
Criminal fraud is a criminal act which is committed by an individual who intends to deceive another individual using a false representation of fact. This misrepresentation of fact results in legal detriment to the plaintiff because they relied on that information as thought it was true. One common type of criminal fraud is financial fraud.
What is Financial Fraud?
Financial fraud, also called finance fraud, is a deceptive or fraudulent business practice which occurs during a financial transaction. A financial crime may occur in many different ways, including:
- Fraudulent billing;
- Payroll fraud;
- Credit card fraud; and
- Bank fraud.
The victims of financial fraud may be:
- States; or
- Organizations, including charities.
What is Credit Card Fraud?
Credit card fraud is a form of financial fraud which is a common occurrence in today’s world. In the United States, there is an estimated $1 billion dollars lost to various credit card fraud practices every year.
Because of this, it is important for individuals to be aware of ways to prevent or report lost or stolen credit cards.
How is Credit Card Theft Accomplished?
Credit card theft is a unique issue because the physical credit card, in many cases, does not have to be stolen in order to accomplish this crime. Instead, a thief will obtain information such as an individual’s:
- Credit card account number;
- Password; and
- Personal information, including:
- date of birth;
- social security number; and
- other personal information.
This may be accomplished by a number of means which are associated with identity theft crimes, including:
- Hacking into an individual’s computer or online accounts to retrieve information;
- Perpetrating scams or fraud schemes aimed at obtaining the individual’s information;
- Theft of other physical items that contain the individual’s data, such as a wallet or purse; and
- Capitalizing on the individual’s stress or worries regarding heavy credit card debt.
Stealing an individual’s physical credit card is, in most cases, useless, unless the thief also obtains the individual’s personal information. Because of this, it is important for individuals to protect their personal and confidential information carefully as well as keep their credit cards in the same place.
By having knowledge regarding how credit card thieves operate, it may be possible to reduce the risks of these types of thefts from occurring.
How Do I Prevent Credit Card Fraud?
Individuals may prevent credit card fraud by exercising certain practical safety precautions, including:
- Not giving out credit card or PIN number information unless dealing with a trustworthy business;
- Destroying receipts immediately or storing them in a safe location;
- Never leaving cards out in the open;
- Not writing PIN numbers and storing them in an individual’s wallet; and
- Enrolling in online statements which allow an individual to view charges instantly online.
Another important step individuals can take is to regularly obtain a credit report. A credit report will help an individual determine what outstanding loans and obligations exist under their name.
What Should I Do as the Victim of Credit Card Fraud?
It is essential for an individual to report a stolen credit card immediately to the issuer of the card. Most companies have 24 hour phone lines available for individuals to report if their card is lost or stolen.
Additionally, there are other agencies which individuals can contact, including:
- The Federal Trade Commission (FTC), which submits an individual’s complaint to a center that lists fraud across the country to help local law enforcement; and
- The individual’s local Consumer Protection Agency.
Pursuant to federal laws, the maximum liability of a credit card holder for a lost or stolen credit card is $50 upon reporting the card lost or stolen.
What Are Possible Defenses to Financial Fraud?
There are several possible defenses to a charge of financial fraud, including:
- Insufficient evidence, when a prosecutor or insurer is not able to meet the burden of proof needed to prove that a fraud occurred;
- A non-fraudulent statement. One element of the offense of financial fraud is making a false, or fraudulent, statement. If a defendant is able to show that the misleading fact was actually an opinion or that the statement was technically true, then fraud did not occur;
- Entrapment, which occurs when the government compels an innocent individual to commit a crime they otherwise would not have done for the purpose of trying to trap them in the crime; and
- Absence of intent of financial fraud. Fraud includes an action to deceive. The prosecutor or insurer has the burden of proving deceit. The defendant would have to show that they did not have the intent to commit financial fraud.
Should I Consult an Attorney?
It is important to consult with an experienced fraud attorney if you have any issues, questions, or concerns with credit card fraud. Additionally, your attorney will advise you of the laws in your jurisdiction and assist you with bringing causes of action against any individuals who have used your credit card.