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Fraud can be either a civil violation or a criminal offense. Although the definition of fraud may vary by jurisdiction, it is normally described as a deceptive act which is intended to produce a financial or personal gain for the perpetrator. There are numerous types of fraud, including benefit, insurance, and tax fraud, as well as forgery, embezzlement, and identity theft, among others.
The definitions and penalties for the various types of fraud will differ by jurisdiction. As a rule, most types of fraud may be the basis for a civil violation. When an act of fraud is pursued as a civil violation, the plaintiff will be granted a monetary judgment against the defendant if he or she prevails at trail. If fraud is charged as a crime, on the other hand, the defendant may face criminal penalties such as incarceration or probation.
Tax fraud is one of the more common types of fraud. Simply making an unintentional error on a tax return does not rise to the level of fraud; however, when a taxpayer intentionally fails to report income or claims a dependent or deduction that he or she is not entitled to claim, for example, it may be considered an act of criminal fraud. Aside from facing hefty monetary penalties, a taxpayer who commits fraud may also face incarceration.
Benefit, or welfare, fraud is another type of fraud that is prevalent in the United States. When an applicant for public benefits, such as Medicaid or food stamps, knowingly makes a false statement on the application, he or she may be charged with benefit fraud. Common examples of situations that rise to the level of welfare fraud include failing to claim income, claiming household members that do not exist, or failing to divulge resources. In most cases, a first offense will only result in suspension of benefits; however, criminal fraud charges could be filed.
Forgery, embezzlement, and insurance fraud are types of fraud found in the business sector, as a rule. Whenever a person signs another person's name to a document in an attempt to secure personal or financial gain, he or she has committed a type of fraud known as forgery. By definition, embezzlement is usually defined as appropriating funds by a fraudulent means for personal gain. Insurance fraud comes in many forms, such as claiming damages that did not happen or reporting a loss that did not occur.
Identity theft is a new form of fraud that has become a significant concern in the digital age. When a person uses illegally obtained personal information regarding another person to assume his or her identity, that may be fraud. As a rule, theft of an identity is done in order to use the person's credit, or for some other type of personal gain, which makes the crime a fraud.
Fraud in the inducement is also another one that is fairly common yet not known all that well. That fraud simply involves someone promising a condition that causes the other party to enter into an arrangement only to discover later the promise was groundless. It must be shown that, absent that promise or condition, the complaining party would never have entered into the agreement.
Here's how that works. Let's say Bob sees Joe the Dentist to have some work done. Joe the Dentist says Bob needs an expensive procedure. Bob says he can't afford the procedure, so Joe says insurance might cover it. Joe claims to check with Bob's insurance company and tells Bob that the procedure will be
covered. Bob tells Joe to go ahead and perform the procedure.
Bob later gets a Bill for $8,000 as his insurance company didn't cover the procedure. In that case, Bob may be able to argue fraud in the inducement -- he would have never had the procedure done without assurances from Joe that it would be paid for by insurance.
Believe it or not, this kind of thing goes on regularly. Most people in Bob's position would pay Joe's bill and chalk it up to experience rather than how "fraud in the inducement" and refuse to pay. Fraud in the inducement, by the way, is a great defense to raise in collection cases if it is available.
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