Fraud

Section 380(1) of the Criminal Code provides the general definition for fraud in Canada:

380. (1) Every one who, by deceit, falsehood or other fraudulent means, whether or not it is a false pretence within the meaning of this Act, defrauds the public or any person, whether ascertained or not, of any property, money or valuable security or any service,

(a) is guilty of an indictable offence and liable to a term of imprisonment not exceeding fourteen years, where the subject-matter of the offence is a testamentary instrument or the value of the subject-matter of the offence exceeds five thousand dollars; or

(b) is guilty

(i) of an indictable offence and is liable to imprisonment for a term not exceeding two years, or

(ii) of an offence punishable on summary conviction, where the value of the subject-matter of the offence does not exceed five thousand dollars.[8]

In addition to the penalties outlined above, the court can also issue a prohibition order under s. 380.2 (preventing a person from "seeking, obtaining or continuing any employment, or becoming or being a volunteer in any capacity, that involves having authority over the real property, money or valuable security of another person"). It can also make a restitution order under s. 380.3.[9]

The Canadian courts have held that the offence consists of two distinct elements:

• A prohibited act of deceit, falsehood or other fraudulent means. In the absence of deceit or falsehood, the courts will look objectively for a "dishonest act"; and
• The deprivation must be caused by the prohibited act, and deprivation must relate to property, money, valuable security, or any service.[10]

The Supreme Court of Canada has held that deprivation is satisfied on proof of detriment, prejudice or risk of prejudice; it is not essential that there be actual loss.[11] Deprivation of confidential information, in the nature of a trade secret or copyrighted material that has commercial value, has also been held to fall within the scope of the offence.[12]

The proof requirements for criminal fraud charges in the United States are essentially the same as the requirements for other crimes: guilt must be proved beyond a reasonable doubt. Throughout the United States fraud charges can be misdemeanors or felonies depending on the amount of loss involved. High value fraud can also trigger additional penalties. For example, in California, losses of $500,000 or more will result in an extra two, three, or five years in prison in addition to the regular penalty for the fraud.[13]

The U.S. government's 2006 fraud review concluded that fraud is a significantly under-reported crime, and while various agencies and organizations were attempting to tackle the issue, greater co-operation was needed to achieve a real impact in the public sector.[14] The scale of the problem pointed to the need for a small but high-powered body to bring together the numerous counter-fraud initiatives that existed.

Although elements may vary by jurisdiction and the specific allegations made by a plaintiff who files a lawsuit that alleged fraud, typical elements of a fraud case in the United States are that:[15]

1. Somebody misrepresents a material fact in order to obtain action or forbearance by another person;
2. The other person relies upon the misrepresentation; and
3. The other person suffers injury as a result of the act or forbearance taken in reliance upon the misrepresentation.

To establish a civil claim of fraud, most jurisdictions in the United States require that each element of a fraud claim be pleaded with particularity and be proved by a preponderance of the evidence,[16] meaning that it is more likely than not that the fraud occurred. Some jurisdictions impose a higher evidentiary standard, such as Washington State's requirement that the elements of fraud be proved with clear, cogent, and convincing evidence (very probable evidence),[17] or Pennsylvania's requirement that common law fraud be proved by clear and convincing evidence.[18]

The measure of damages in fraud cases is normally computed using one of two rules:[19]

1. The "benefit of bargain" rule, which allows for recovery of damages in the amount of the difference between the value of the property had it been as represented and its actual value;
2. Out-of-pocket loss, which allows for the recovery of damages in the amount of the difference between the value of what was given and the value of what was received.

Special damages may be allowed if shown to have been proximately caused by defendant's fraud and the damage amounts are proved with specificity.

Many jurisdictions permit a plaintiff in a fraud case to seek punitive or exemplary damages.[20]

Zhang Yingyu's story collection The Book of Swindles (available here;[21] ca. 1617) testifies to rampant commercial fraud, especially involving itinerant businessmen, in late Ming China.[22] The journal Science reported in 2017 that fraud is rife in Chinese academia, resulting in numerous article retractions and harm to China's international prestige.[23] The Economist, CNN, and other media outlets regularly report on incidents of fraud or bad faith in Chinese business and trade practices.[24][25][26] Forbes cites cybercrime as a persistent and growing threat to Chinese consumers.[27]

In 2016 the estimated value lost through fraud in the UK was £193 billion a year.[28]

In January 2018 the Financial Times reported that the value of UK fraud hit a 15-year high of £2.11bn in 2017, according to a study. The article said that the accountancy firm BDO examined reported fraud cases worth more than £50,000 and found that the total number rose to 577 in 2017, compared with 212 in 2003. The study found that the average amount stolen in each incident rose to £3.66m, up from £1.5m in 2003.[29]

As at November 2017, fraud is the most common criminal offence in the UK according to a study by Crowe Clark Whitehill, Experian and the Centre for Counter Fraud Studies.[30] The study suggests the UK loses over £190 billion per year to fraud. £190 billion is more than 9% of the UK's projected GDP for 2017 ($2,496 (£2,080) billion according to 'Statistics Times). The estimate for fraud in the UK figure is more than the entire GDP of countries such as Romania, Qatar and Hungary.[31]

According to another review by the UK anti-fraud charity Fraud Advisory Panel (FAP), business fraud accounted for £144bn, while fraud against individuals was estimated at £9.7bn. The FAP has been particularly critical of the support available from the police to victims of fraud in the UK outside of London. Although victims of fraud are generally referred to the UK's national fraud and cyber crime reporting centre, Action Fraud, the FAP found that there was "little chance" that these crime reports would be followed up with any kind of substantive law enforcement action by UK authorities, according to the report.[32]

In July 2016 it was reported that fraudulent activity levels in the UK increased in the 10 years to 2016 from £52 billion to £193bn. This figure would be a conservative estimate, since as the former commissioner of the City of London Police, Adrian Leppard, has said, only 1 in 12 such crimes are actually reported.[33] Donald Toon, director of the NCA's economic crime command, stated in July 2016: "The annual losses to the UK from fraud are estimated to be more than £190bn". Figures released in October 2015 from the Crime Survey of England and Wales found that there had been 5.1 million incidents of fraud in England and Wales in the previous year, affecting an estimated one in 12 adults and making it the most common form of crime.[34]

Also in July 2016, the Office for National Statistics (ONS) stated "Almost six million fraud and cyber crimes were committed last year in England and Wales and estimated there were two million computer misuse offences and 3.8 million fraud offences in the 12 months to the end of March 2016." Fraud affects one in ten people in the UK. According to the ONS, most fraud relates to bank account fraud. These figures are separate from the headline estimate that another 6.3 million crimes (distinct from fraud) were perpetrated in the UK against adults in the year to March 2016.[35]

Fraud was not included in a "Crime Harm Index" published by the Office for National Statistics in 2016. Michael Levi, professor of criminology at Cardiff University, remarked in August 2016 that it was "deeply regrettable" fraud is being left out of the first index despite being the most common crime reported to police in the UK. Levi said "If you've got some categories that are excluded, they are automatically left out of the police's priorities." The Chief of the National Audit Office (NAO), Sir Anyas Morse has also said "For too long, as a low-value but high-volume crime, online fraud has been overlooked by government, law enforcement and industry. It is now the most commonly experienced crime in England and Wales and demands an urgent response."[36]

Since 2007, fraud in England and Wales and Northern Ireland has been covered by the Fraud Act 2006. The Act was given Royal Assent on 8 November 2006, and came into effect on 15 January 2007.[37]

The Act gives a statutory definition of the criminal offence of fraud, defining it in three classes—fraud by false representation, fraud by failing to disclose information, and fraud by abuse of position. It provides that a person found guilty of fraud is liable to a fine or imprisonment for up to twelve months on summary conviction (six months in Northern Ireland), or a fine or imprisonment for up to ten years on conviction on indictment. This Act largely replaces the laws relating to obtaining property by deception, obtaining a pecuniary advantage and other offences that were created under the Theft Act 1978.

In Scots law, fraud is covered under the common law and a number of statutory offences. The main fraud offences are common law fraud, uttering, embezzlement, and statutory fraud. The Fraud Act 2006 does not apply in Scotland.

The Serious Fraud Office is an arm of the Government of the United Kingdom, accountable to the Attorney-General.

The National Fraud Authority (NFA) was, until 2014, a government agency co-ordinating the counter-fraud response in the UK.

Cifas is a British fraud prevention service, a not-for-profit membership organisation for all sectors that enables organisations to share and access fraud data using their databases. Cifas is dedicated to the prevention of fraud, including internal fraud by staff, and the identification of financial and related crime.