Fraud

A flyer warning people of scams during the COVID-19 pandemic

Fraud (or defrauding or scamming) is a crime in which someone tricks somebody else to get unfair or unlawful gain. Frauds are almost always about money, either directly or indirectly.

A fraudster or a fraud is the person who commits the fraud. Something that involves fraud is fraudulent (as in He tried to pass a fraudulent cheque). To defraud someone is to commit a fraud against them.

Methods

Fraudsters may find people to defraud by phone calls, emails, or websites.

Fraud often starts by saying there is a free or low-price item. The fraudster then asks for personal information, such as a home address and bank account numbers. Instead of giving an item in return, the fraudster takes their money. Fraudsters often target senior citizens.

Ponzi schemes and pyramid schemes are forms of investment fraud.^[1] In 2009 Bernie Madoff was charged for defrauding over 40,800 people in a $64 billion Ponzi scheme.^[2] The scheme has been described as "the largest fraudulent scheme in history" and "one of the most prolific financial crimes in American history”.^[2]

Some fraudsters use ransomware and/or phishing to gather private information from their victims.^[3]

Mug shot of Charles Ponzi. Ponzi schemes are a form of financial fraud

Laws

Fraud is a criminal wrong: a fraudster may be prosecuted and imprisoned. It is also a civil wrong: a fraud victim may sue the fraudster to get compensation.

Laws against fraud differ in each jurisdiction.

England

In England an Act of Parliament defines three kinds of fraud.

fraud by false representation,
fraud by failing to disclose information, and
fraud by abuse of position.

Lesser cases are heard in a Magistrates' Court; more serious offences are tried in the High Court (jury proceedings).

Related pages

References

↑ "Common Types of Investment Fraud". Washington State Department of Financial Institutions. Retrieved 2024-11-13.
↑ ^2.0 ^2.1 "Office of Public Affairs | Justice Department Announces Distribution of Over $158.9M to Nearly 25,000 Victims of Madoff Ponzi Scheme | United States Department of Justice". www.justice.gov. 2023-12-11. Retrieved 2024-11-13.
↑ "Common Frauds and Scams". United States Federal Bureau of Investigation.

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[1] "Common Types of Investment Fraud". Washington State Department of Financial Institutions. Retrieved 2024-11-13.

[:0-2] 2.0 ^2.1 "Office of Public Affairs | Justice Department Announces Distribution of Over $158.9M to Nearly 25,000 Victims of Madoff Ponzi Scheme | United States Department of Justice". www.justice.gov. 2023-12-11. Retrieved 2024-11-13.

[3] "Common Frauds and Scams". United States Federal Bureau of Investigation.

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