Fraud is when someone uses lies or trickery to get money or something else valuable. It can happen in many ways, and people who commit fraud can face serious consequences. Some fraud cases are handled in civil court, while others go through the criminal justice system. Knowing the difference between civil and criminal fraud can help you understand what’s at stake if you’re involved in a case like this—either as a victim or accused person.
What Is Fraud?
Fraud is any kind of dishonest action meant to take money, property, or other benefits from someone else. It usually involves making a false statement or hiding the truth to trick another person. Fraud can happen between two people, inside a company, or through large-scale scams affecting thousands.
The Association of Certified Fraud Examiners defines fraud as “any activity that relies on deception in order to achieve a gain.” That gain could be money, goods, services, or anything else of value.
What Is Criminal Fraud?
Criminal fraud is when a person breaks the law by committing fraud. The government, either the state or federal, brings criminal charges against the person. These cases are more serious than civil fraud cases because they can lead to jail time, large fines, and a permanent criminal record.
Some common types of criminal fraud include:
- Credit card fraud
- Healthcare fraud
- Wire and mail fraud
- Bank fraud
- Bankruptcy fraud
To get a conviction, the government must prove the fraud “beyond a reasonable doubt.” This is the highest level of proof in the legal system.
Examples:
- A person sets up fake medical claims and bills the government for services that were never provided.
- Someone lies on a bankruptcy form to hide assets from the court.
In the U.S., people convicted of wire or mail fraud can face up to 20 years in prison. If the fraud involves a bank or a disaster relief fund, the punishment can go up to 30 years and include a fine of $1 million.
What Is Civil Fraud?
Civil fraud happens when one person or business accuses another of lying or tricking them in a way that causes financial harm. These cases are handled in civil court. The goal of a civil fraud case is usually to recover money, not to send anyone to jail.
The person bringing the case (the plaintiff) has to show:
- A false statement was made.
- The person who made it knew it was false.
- The other party believed the false statement.
- They suffered financial damage as a result.
Civil fraud can happen in many ways:
- A company lies on a contract and causes a partner to lose money.
- An employee submits fake expense reports to steal from their employer.
The court may order the person who committed the fraud to pay the victim back. The standard of proof is lower in civil cases. The plaintiff only needs to show it’s “more likely than not” that fraud occurred.
How Criminal and Civil Fraud Cases Are Tried Differently
There are a few important differences between criminal and civil fraud cases:
- Who brings the case:
- Criminal: Prosecutor for the government.
- Civil: A person or business who was harmed.
- Burden of proof:
- Criminal: Must prove guilt beyond a reasonable doubt.
- Civil: Must show it’s more likely than not the fraud happened.
- Penalties:
- Criminal: Jail time, fines, restitution, probation.
- Civil: Usually money damages or court orders to pay back what was taken.
- Appeals:
- Criminal: Only the person found guilty can appeal.
- Civil: Either side can appeal the decision.
Common Types of Fraud
Fraud comes in many forms. Below are six types that show how it can affect individuals, companies, and government programs.
Internal Fraud
Internal fraud happens inside a business. It’s often carried out by employees who steal money or misuse company property. This can include:
- Faking receipts or expense reports
- Taking cash from a register
- Creating fake vendor accounts to steal money
In the U.S., 75% of employees have admitted to stealing from their employers at least once. Many companies use security tools and regular audits to catch this type of fraud early.
Identity Fraud
This type of fraud involves stealing someone’s personal or financial information. The thief may open credit cards, take out loans, or commit crimes under someone else’s name. Victims often suffer financial losses and may spend years fixing their credit.
Vendor Fraud
Vendor fraud targets businesses through fake or dishonest suppliers. This often happens through:
- Email scams pretending to be a trusted vendor
- Overbilling or fake invoices
- Employees teaming up with outside vendors to steal
Around 47% of businesses say they’ve dealt with vendor fraud attempts.
Romance Fraud
Romance fraud is when someone pretends to be interested in a romantic relationship to steal money or personal information. This often happens online, through dating apps or social media. Once the victim trusts the person, the fraudster asks for money or access to bank accounts.
Health Care Fraud
This can involve doctors, clinics, or patients. A common example is billing for medical services that were never provided. In one case, a lab in Georgia was charged with $463 million in fake Medicare claims, and over $187 million was recovered by the government.
Payment Fraud
Payment fraud involves fake or stolen financial transactions. Some common types include:
- Fake invoices sent to businesses
- Business email compromise (BEC), where hackers send fake payment instructions
- Credit card fraud or stolen checks
One Boston company lost $1.25 million in a single payment fraud event. In another case, Facebook and Google were scammed out of $100 million but managed to recover about half.
Payment fraud is on the rise. Reports show a 71% increase in attempted fraud between 2022 and 2023. Nearly 96% of companies were targeted at least once.
Conclusion: Talk to a Lawyer About Fraud Cases
Whether you’re going through a fraud investigation or think you’ve been the victim of fraud, it’s smart to talk to a lawyer right away. Fraud can lead to large fines, jail time, or serious financial loss. A criminal defense lawyer in Dallas can help you understand your rights, gather the right evidence, and build a strong case—whether it’s civil or criminal.
If you’re in Dallas and have questions about a fraud case, call (214) 432-8860 to speak with someone who can help.