What is fraud?

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What is fraud?

Fraud is a crime committed by using dishonesty to deprive or risk depriving a person or the public of something. Fraud can be committed in many ways.

Section 380 of the Criminal Code defines the crime of fraud as “defrauding” a person or the public “through deceit, falsehood, or other fraudulent means” of any “property, money, or valuable security or any service”. Defrauding is using dishonesty to deprive someone of something, or to risk doing so. Fraudulent means are anything that a reasonable person would consider dishonest.

Fraud can be committed verbally, in writing, or through conduct. Some common forms of fraud are:

  • Credit card fraud
  • Identity theft
  • Forgery
  • Tax fraud
  • Insurance fraud
  • Benefits fraud
  • Worker’s Compensation Board (WCB) fraud
  • Check fraud
  • Financial Statement fraud.
  • Fraudulent payroll or billing schemes
  • Construction fraud
  • Investment fraud
  • Mass marketing fraud, such as telemarketing fraud
  • Economic extortion
  • Bribery

Some of these forms of fraud are also separate criminal offences (such as forgery, which I have a separate FAQ on) or regulatory offences, and can give rise to other kinds of liability.

Is it still fraud if I did not get any money from it?

Yes, fraud can be committed without actually taking anyone’s money (or other valuable thing). This is because fraud includes creating a real risk of “economic loss”.

For example, you can defraud the government by not reporting all of your taxable income, even if you get caught right away and do not actually get away with keeping money belonging to the government. By not reporting your income, you created a real risk that the government would be deprived of its tax revenue. This is fraud.

How is fraud different from theft?

Fraud is using dishonesty to deprive or risk depriving a person or the public of something. Theft is taking something from a person or organization without their consent. Some conduct could be considered both theft and fraud, but they are two different offences. There are three main differences between fraud and theft:

  1. Fraud can take many forms, while theft is more specific: unlawfully taking or converting something without consent.
  2. Theft always involves taking or converting the use of something, but fraud can be committed just by dishonestly creating a real risk that someone will be deprived of something (such as financial risk).
  3. Fraud always involves a kind of dishonesty or sneakiness that not all thefts have. While some might say that taking something that is not yours without consent is inherently “dishonest”, some thefts are not sneaky or deceitful in the way that frauds are. For example, you can commit theft by looking someone in the eye, telling them, “I am stealing your iPhone now”, and then taking their iPhone. This is not “deceit, falsehood, or other fraudulent means”. It is not sneaky or hidden. In that sense, this theft is not dishonest; it is not fraud.