Fraud can be defined as both civil fraud and criminal fraud. In the case of civil fraud, government agencies or individuals/entities who have suffered from fraudulent damages can file lawsuits to stop the fraud, seek monetary compensation, or both. In the case of criminal fraud, a person may be prosecuted for fraud and may face fines, imprisonment, or both.

Criminal Fraud

The evidentiary requirements for charging criminal fraud in the United States are generally the same as those for other crimes: guilt must be proven beyond a reasonable doubt. In different jurisdictions across the United States, fraud charges can range from misdemeanors to felonies, depending on the amount of loss involved. High-value fraud can also result in additional penalties. For example, in California, losses of $500,000 or more can lead to an additional two, three, or five years of imprisonment on top of the regular penalties for the fraudulent conduct.

The conclusion drawn from the U.S. government’s 2006 fraud examination is that fraud is a severely underreported criminal behavior. While various agencies and organizations are attempting to address this issue, enhanced cooperation is still needed to have a significant impact on the public sector. The scale of the problem indicates the need for a small yet powerful entity to consolidate the numerous existing anti-fraud measures.

Civil Fraud

Although the elements may vary based on the jurisdiction and specific allegations raised by the plaintiff filing the fraud lawsuit, typical elements of fraud cases in the United States include:

Reliance by others on false representations; and harm suffered by others as a result of relying on the false representations or refraining from taking action.
To bring a civil fraud claim, most jurisdictions in the United States require each element of the fraud claim to be pleaded with particularity and proven through substantial evidence, indicating a greater likelihood that fraud occurred. Some jurisdictions impose a higher standard of evidence, such as Washington state requiring clear, cogent, and convincing evidence (evidence that is highly probable) to establish the elements of fraud, or Pennsylvania requiring clear and convincing evidence to prove common law fraud.

Damages in fraud cases are typically calculated using one of two rules:

The “out-of-pocket” rule, which allows for damages to be awarded based on the difference between the value the property represented and the actual value received.
The loss of benefit rule, which allows for damages to be awarded based on the difference between the value given and the value received.

If it is proven that the damages were directly caused by the defendant’s fraud and the amount of damages is specifically proven, special damages may be allowed.

Certain jurisdictions may allow plaintiffs in fraud cases to seek punitive or exemplary damages.

Types of Fraud:

Phishing scams, identity theft scams, investment fraud, online shopping scams, pyramid schemes, phone scams, social engineering scams, fake lottery scams, loan fraud, romance scams, and so on.

In recent years, a new type of scam that has become prevalent in the United States is the combination of investment fraud and romance scams, known as romance or love scams.

What is a romance scam?

It involves establishing trust, building a relationship, and gaining the victim’s trust through a fictitious online romantic relationship. Once the trust is established, the scammer recommends online investments such as cryptocurrencies, forex, stocks, etc. They may use insider information to convince the victim that these investments are profitable.