Fraud is an intentional untruth or a dishonest scheme used to take deliberate and unfair advantage of another person or group of people. It includes any means—such as surprise, trickery, pressure, or cunning—by which one person or group cheats another. Fraud can involve money, securities (stocks and bonds), bank and credit card accounts, insurance plans, real estate, jewelry, and other goods. Countries throughout the world have laws against numerous types of fraud.
Fraud can range from individual schemes to major corporate scandals. For example, identity theft is a type of fraud that involves the unauthorized use of an individual’s personal information, such as a name or credit card number. Corporate fraud includes various misdeeds committed by businesses or professional people. A company that deliberately misrepresents its financial condition may harm its investors and employees, but its executives may benefit illegally from such fraudulent information. Fraud committed by businesses and professional people is sometimes called white-collar crime.
Cases of fraud are often categorized as actual fraud or constructive fraud. Actual fraud involves misrepresentation designed specifically to cheat others, as when a company sells lots in a subdivision that does not exist. Actual fraud includes something intentionally said, done, or omitted with the design of continuing what a person knows to be a cheat or a deception. Constructive fraud includes acts or words that tend to lead others to wrong assumptions or conclusions. For example, a person is committing constructive fraud if he or she sells an automobile without telling the purchaser that the car often stalls.
In many cases, a victim of fraud may sue the wrongdoer and recover the amount of damages caused by the fraud. However, identifying and locating the wrongdoer is often difficult. For instance, a fraudulent business might close without notice and open a similar business under a new name in a different city.
