Fraud in economic, financial and consumer spheres

SECTION 1:

Definition of fraud

Before you read

Discuss these questions:

1. What do you know about a fraud?

2. Have you ever met people who deliberately deceive other people with the aim to obtain some money, property or services?

3. What other terms of ‘fraud’ do you know ?

Key vocabulary:

personal gain, hoaxes, forged objects, theft by deception, misrepresentation, result of accident or negligence, alleged victim, to base upon, plaintiff, cancellation of the contract, commercial fraud, consumer fraud, confidence tricks, identity theft, securities fraud, suppression of documents, tort.

Read and translate the following text :

What is a fraud

In the broad sense, a fraud is a deception made for personal gain, although it has a more specific legal meaning, the exact details varying between different jurisdictions. Many hoaxes are fraudulent, although those which has not been made for personal gain. But not all frauds are hoaxes - electoral fraud, for example. Fraud permeates into many areas of life, including commerce, service, art, science and archaeology. In the broad legal sense a fraud is any crime or civil wrong for the purpose of gain that utilizes some deception practiced on the victim as its principal method.

In criminal law, fraud is the crime or offense of deliberately deceiving people in order to damage them — usually, to obtain property or services. Fraud can be accomplished through the aid of forged objects. In criminal law it is called "theft by deception." Fraud can be committed through many methods, including mail, wire, phone, and the Internet.

Frauds are either actual or constructive. An actual fraud requires that the act be motivated by the desire to deceive another to his harm, while a constructive fraud is a presumption of overreaching conduct that arises when a profit is made from a relation of trust. The courts have found it undesirable to make a rigid definition of the type of misrepresentation that amounts to actual fraud and have preferred to consider individually the factors in each case. The misrepresentation may be a positive lie, a failure to disclose information, or even a statement made in reckless disregard of possible inaccuracy. Actual fraud can never be the result of accident or negligence, because of the requirement that the act be intended to deceive. The question of commission may depend upon the competence and commercial knowledge of the alleged victim. Thus dealings with a minor, a lunatic, a feeble-minded person, a drunkard, or (in former times) a married woman are scrutinized more closely than dealings with an experienced businessman. A lawsuit based upon actual or constructive fraud must specify the fraudulent act, the plaintiffs reliance on it, and the loss suffered. The remedy granted to the plaintiff in most cases is either compensatory (and possibly punitive) damages for the injury or cancellation of the contract or other agreement and the restoration of the parties to their former status. In a few states of the United States both damages and cancellation are available. In certain suits based upon a contract, fraud may be introduced as a defense.

Acts which may constitute criminal fraud include:

• commercial fraud

• consumer fraud

• imposter fraud

• confidence tricks

• false advertising

• identity theft

• false billing

• forgery of documents or signatures

• taking money which is under your control, but not yours (embezzlement)

• health fraud, selling of products of spurious use, such as quack medicines

• creation of false companies or "long firms"

• false insurance claims

• securities fraud such as pump and dump

Fraud, in addition to being a criminal act, is also a type of civil law violation known as a tort. A tort is a civil wrong for which the law provides a remedy. A civil fraud typically involves the act of making a false representation of a fact susceptible of actual knowledge which is relied upon by another person, to that person's detriment.