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What Is Fraud?

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In its most basic form, fraud occurs when someone lies to obtain something that benefits them, typically of monetary value. Since fraud can come in many forms, the law may view it as both a criminal and a civil offense. When trying to determine what fraud is, it’s usually best to break it down into its most common forms.

Determining What Is Fraud

When trying to determine whether something actually constitutes fraud, there are five basic criteria:

  1. There is a lie or false statement
  2. The person accused of fraud must know the statement is false
  3. The false statement was made with the intent to deceive the victim
  4. The false statement must be something reasonably reliable or believable
  5. The victim is in some way worse off for having believed the false statement

Consumer Fraud

Consumer fraud comes in a variety of forms, from work at home scams to identity theft. Credit card fraud is widely held to be the most common form of consumer fraud. This is where people gain access to your credit card information for one purpose and then use that information to make charges against your credit accounts. Sadly, the people who are in the most dire financial situations are the very people fraudsters like to prey upon.

Often, consumer fraud can fall into both criminal and civil jurisdictions. In the event that a prosecutor doesn’t pursue a criminal fraud case on your behalf, you may still be able to sue for damages in civil court.

Employee Fraud

Unlike consumer fraud that is aimed at everyday people, employee fraud targets companies and their reputations. The most common types of employee fraud include:

  • Corruption
  • Embezzlement
  • Kickbacks
  • Selling trade secrets
  • Theft of company supplies
  • Worker’s compensation fraud

Not only can employee fraud cost businesses quite a bit of money, it can also damage a company’s reputation with the customers it serves.

Government Fraud

People will occasionally also try to defraud the government out of money. The most common types of fraud against the government include:

  • Bankruptcy fraud
  • Counterfeiting
  • Medicare and Social Security fraud
  • Tax evasion and fraud
  • Welfare fraud

While this type of fraud may seem like an issue that doesn’t impact your life the way consumer or business fraud does, it can make many already overburdened government agencies increasingly inefficient. Government fraud can also waste the time and resources of the government agencies investigating it, compounding the wasted financial resources.

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