Fraud in Canada is not a single legal problem. The same dishonest conduct can be both a criminal offence prosecuted by the Crown and a civil wrong for which a private party sues, and the two follow entirely separate tracks. The distinction matters because it changes who brings the case, how high the burden of proof is, and what is at stake: criminal fraud under section 380 of the Criminal Code must be proven beyond a reasonable doubt and can lead to a criminal record and imprisonment, while civil fraud only needs to be shown on a balance of probabilities and usually ends in an order to pay damages. This article explains how each type of fraud works, how the two differ, and why the same set of facts can give rise to both at once.
Key Takeaways
- The core difference is who brings the case: the Crown prosecutes criminal fraud on behalf of society, while a private plaintiff sues for civil fraud to recover their own losses.
- Criminal fraud is defined in section 380 of the Criminal Code and must be proven beyond a reasonable doubt. Civil fraud only needs to be proven on a balance of probabilities — a materially lower standard.
- Fraud over $5,000 carries a maximum of 14 years in prison; fraud of $5,000 or less carries a maximum of 2 years by indictment (or 2 years less a day / a $5,000 fine summarily).
- The same conduct can trigger both a criminal prosecution and a separate civil lawsuit — they are independent proceedings with different goals, standards, and possible outcomes.
- The four elements of civil fraud are set out in Bruno Appliance and Furniture Inc. v. Hryniak, 2014 SCC 8.
The Core Difference: Who Brings the Case
The primary difference between a civil fraud case and a criminal fraud case is who is seeking the remedy. If a private individual or business is seeking compensation after being victimized by fraud, that’s a civil case. If the Crown is prosecuting an individual to hold them criminally accountable, that’s a criminal case. The same underlying conduct can give rise to both a criminal prosecution and a separate civil lawsuit at the same time — they proceed independently, with different standards of proof and different possible outcomes.
Criminal Fraud
Criminal fraud is defined in section 380 of the Criminal Code. In general terms, a person who uses deceit, falsehood, or other fraudulent means to defraud the public or any person of property, money, a valuable security, or a service can be charged with an indictable or hybrid offence, depending on the amount involved.
Criminal fraud investigations require the Crown to prove, beyond a reasonable doubt, that the accused knowingly engaged in deceptive conduct, that the deception was intentional (or reckless as to its falsity), and that the victim suffered a deprivation — typically a loss of money, property, or another valuable interest, or exposure to a risk of loss.
Section 380.1 of the Criminal Code sets out aggravating factors a court must consider at sentencing, including:
- The magnitude, complexity, duration, or degree of planning of the fraud.
- Whether the offence adversely affected, or had the potential to adversely affect, the Canadian economy or a financial market.
- The number of victims involved.
- Whether the offender exploited a position of trust or authority to commit the fraud.
- Whether the offender failed to comply with a licensing requirement or professional standard applicable to their conduct.
Fraud Over $5,000 vs. Fraud $5,000 or Under
The value involved changes both the classification and the maximum penalty. Under section 380(1)(a), fraud over $5,000 (or involving a testamentary instrument, such as a will) is a straight indictable offence with a maximum penalty of 14 years’ imprisonment. Under section 380(1)(b), fraud of $5,000 or less is a hybrid offence: up to 2 years if the Crown proceeds by indictment, or up to 2 years less a day and/or a $5,000 fine if the Crown proceeds summarily. For fraud exceeding $1 million, section 380.1(1.1) imposes a mandatory minimum sentence of 2 years’ imprisonment.
Types of Criminal Fraud
Section 380 is broadly worded and captures a wide range of fraudulent conduct, from a business owner who knowingly sells a faulty product while advertising it as functional to more specialized offences, including stock market manipulation, using the mail to defraud, and fraudulent concealment of documents. Other conduct commonly prosecuted as fraud includes embezzlement, identity theft, and tax fraud.
Civil Fraud
Civil fraud cases take place between private parties rather than between the Crown and an accused. In a civil fraud claim, the plaintiff (the alleged victim) must prove that the defendant caused them economic or non-economic harm.
This is the point where the two systems differ most sharply: in a civil fraud case, the plaintiff bears the burden of proof, but only needs to prove their case on a balance of probabilities — meaning it is more likely than not that the fraud occurred. This is a materially lower bar than the criminal standard of proof beyond a reasonable doubt, which is why the same conduct that fails to result in a criminal conviction can still succeed as a civil claim.
The tort of civil fraud has four elements, all of which must be proven on a balance of probabilities, as set out by the Supreme Court of Canada in Bruno Appliance and Furniture Inc. v. Hryniak, 2014 SCC 8, [2014] 1 SCR 126:
- The defendant made a false representation.
- The defendant had some knowledge of the representation’s falsehood through knowledge or recklessness.
- The false representation caused the plaintiff to act.
- The plaintiff’s actions resulted in a loss.
Where a plaintiff succeeds in a civil fraud case, the defendant will typically be ordered to pay damages rather than face imprisonment. This can include economic damages (such as lost income or lost property) and, in appropriate cases, non-economic damages (such as compensation for significant stress caused by the loss).
Types of Civil Fraud
Civil fraud claims can arise from investment schemes, Ponzi schemes, predatory marriage, false invoices, telephone scams, bank account fraud, and many other forms of deception. In practice, one of the biggest challenges for a plaintiff is proving that the defendant knew the defendant’s representation was false. Fraud lawyers typically use the discovery phase, discovery examinations, and cross-examination to build this evidence, and complex cases often call for a forensic accountant to trace transactions and establish knowledge.
Criminal Fraud vs. Civil Fraud: Side-by-Side Comparison
| Criminal Fraud | Civil Fraud | |
|---|---|---|
| Who brings the case | The Crown, on behalf of the public | A private plaintiff (individual or business) |
| Standard of proof | Beyond a reasonable doubt | Balance of probabilities |
| Governing law | Criminal Code, s. 380 | Common law tort (Bruno Appliance v. Hryniak, 2014 SCC 8) |
| Possible outcomes | Conviction, imprisonment, probation, fines, restitution order, criminal record | Damages (economic and non-economic), restitution |
| Can both proceed? | Yes — a criminal prosecution and a civil claim can proceed independently over the same conduct | Yes — same as at left |
What This Means for You
Being investigated or sued for fraud, or being the victim of it, can trigger both a criminal process and a civil claim at the same time, and the two proceed on different timelines with different standards. A criminal conviction can mean probation, jail time, restitution, and a permanent criminal record, while civil liability generally means paying damages rather than facing imprisonment. Understanding which process you’re in — and what standard of proof actually applies — changes how a case should be defended or pursued from the outset.
Contact Vilkhov Law
If you are facing fraud charges, or considering a civil fraud claim, it is a good idea to speak with an experienced fraud lawyer early. Vilkhov Law has experience with both criminal and civil fraud matters and offers a free, confidential consultation. Contact us to discuss your options.
Frequently Asked Questions
What is the main difference between criminal fraud and civil fraud?
Criminal fraud is prosecuted by the Crown and must be proven beyond a reasonable doubt; a conviction can result in a criminal record, fines, or imprisonment. Civil fraud is pursued by a private plaintiff and need only be proved on the balance of probabilities; a successful claim typically results in a damages award rather than criminal penalties.
Can the same conduct lead to both a criminal charge and a civil lawsuit?
Yes. A criminal prosecution and a civil lawsuit over the same underlying conduct can proceed independently of one another, on different timelines and under different standards of proof.
What is the maximum sentence for fraud in Canada?
Fraud over $5,000 carries a maximum of 14 years’ imprisonment. Fraud of $5,000 or less carries a maximum of 2 years if prosecuted by indictment, or 2 years less a day and/or a $5,000 fine if prosecuted summarily. Fraud exceeding $1 million carries a mandatory minimum sentence of 2 years.
What must a plaintiff prove in a civil fraud claim?
A plaintiff must prove, on a balance of probabilities, that the defendant made a false representation, had some knowledge of its falsity (through knowledge or recklessness), that the false representation caused the plaintiff to act, and that this resulted in a loss.
Is the standard of proof different for civil and criminal fraud?
Yes, significantly. Criminal fraud must be proven beyond a reasonable doubt — the highest standard in Canadian law. Civil fraud only needs to be proven on a balance of probabilities, meaning it is more likely than not that the fraud occurred.
