The word “fraud” evolved from the Latin word “fraus,” which was defined as criminal deception. Merriam-Webster defines fraud as “intentional perversion of truth in order to induce another to part with something of value or to surrender a legal right.” Given that there are numerous ways to “pervert the truth,” there is a broad range of different types of fraud.
What is a Fraud Charge Under Canadian Law?
With so many possible means to engage in fraud, Canada’s Criminal Code provides a broad-based description of potentially fraudulent activity. This allows for a greater degree of prosecutorial discretion in pursuing fraud charges. Section 380(1) of the Criminal Code describes fraud as having two specific elements: 1) a prohibited act of “deceit, falsehood or other fraudulent means;” and 2) that this act deprives the public or specific person of “any property, money or valuable security, or any service.”
Ensuing sections of the Code, along with legal precedents set by court cases, establish “intent” as a crucial component of fraud charges. This means that intent needs to be proved in order to secure a conviction. This also means that people can be charged for their intention to conduct fraud, even if unsuccessful.
Penalties for fraud if convicted under Section 380 depend upon the value of the property involved. Offences involving property valued at less than $5,000 can lead to a maximum prison sentence of two years. Property values greater than $5,000 can result in a maximum prison sentence of up to 14 years. If the property value exceeds $1 million, the minimum sentence is two years imprisonment. In determining penalties, courts consider a number of aggravating factors listed by the Criminal Code. Judges may also consider mitigating factors, such as attempts at restitution, remorse, and absence of a criminal record.
Some fraud types can also be addressed by other sections of the Criminal Code or by other legislation. For example, credit card fraud charges are often brought under Section 342, which covers credit card theft and fraud. Most Tax fraud is typically handled under Section 239 of Canada’s Income Tax Act.
Fraud cases in criminal law tend to be very complicated. When combined with the monetary complexities inherent in many financial transactions, most people charged face stiff challenges in mounting a successful defence. Thus, anyone facing fraud charges in Canada should always seek out the services of a highly competent fraud lawyer.
What Are the Different Types of Fraud?
One might be tempted to say that the number of fraud types is only limited by the ability of people to come up with new ways to pervert the truth. But this is only partially true because new means of fraud also arise with the emergence of new business tools. Thirty or so years ago the various types of check fraud were far more predominant than the few types of internet fraud that started to emerge with that new technology. Today, the number of internet fraud types far surpasses that of check fraud. New and emerging technologies also lead to a merging of fraud types. For example, credit card fraud can also be a form of internet fraud and vice versa.
Describing all of the most common types of fraud is a tall order, but here is a rundown of some of the more common types of business fraud:
Unlike most fraud types, prosecution of tax fraud is typically conducted under the auspices of Section 239 of Canada’s Income Tax Act. Tax fraud includes the willful deception in writing or by statement for the purposes of evading tax payment or falsely claiming refunds and/or credits not due. In addition to prison sentences of up to five years, penalties can include extensive fines.
Mortgage fraud typically involves the deliberate misrepresentation of information for the purposes of obtaining financing that otherwise would not have been granted. There are a variety of mortgage fraud types, but all generally involve deception regarding assets and/or income. Some common forms of mortgage fraud include:
- Purposely providing misleading information about income sources and work details.
- Failing to disclose other mortgages or debts.
- Inflating property values by purposely omitting detrimental property information.
- Using false purchaser names on mortgage applications.
- Acting as or using a “straw buyer” with credit to deceptively secure a mortgage.
- Falsely claiming a rented property is owner-occupied.
Medical fraud is considered prevalent world-wide and primarily involves offenders who make false claims and/or produce fake receipts in order to secure unearned medical benefits from insurers. In 2018, the Canadian Life and Health Insurance Association estimated that fraudulent claims account for between two to 10 percent of total private insurer claims in Canada. That equals between $600 million to $3.4 billion per year. Medical fraud charges are usually brought up under Section 380 of the Criminal Code.
Like medical fraud, insurance fraud is widespread. While medical fraud is often a type of insurance fraud, any type of insurance is subject to potential fraud. Knowingly lying on an insurance application or claim can lead to fraud charges, as can any attempt to deceptively claim damages. Charges relating to insurance fraud are generally laid under Section 380 of the Code.
Credit Card Fraud
Most cases of credit card fraud are addressed under Section 342 of the Criminal Code. Charges can be brought for anyone knowingly possessing, using, or selling a credit card(s) that has been forged or altered. People can also be charged with fraud for using a credit card with the knowledge that it has been revoked or cancelled. Penalties for fraud covered under this section of the Code can result in a maximum penalty of 10 years in prison.
Identity Theft Fraud
Most everyone knows that incidents of identity theft have skyrocketed across Canada in the past decade. Section 403 of the Criminal Code provides a fairly definitive description of identity theft under the law. Identity theft fraud basically includes anyone who “fraudulently personates another person, living or dead, with intent:”
- To advantage themselves or others
- Obtain any property or property interest
- Cause disadvantage or harm to the person being impersonated or others
- To avoid arrest, prosecution or otherwise obstruct justice.
Such fraud isn’t limited to using a person’s identifying information but can also involve the act of pretending to be another person in conjunction with the above.
Internet fraud is so wide encompassing that fraud-related charges are liable to be laid under several different sections of the Criminal Code. Because internet fraud often involves credit cards and/or unauthorized use of a computer, charges can be laid under Section 342. Charges might also be laid in relation to Section 403 covering identity theft. And, because such fraud often intrudes on privacy, Section 184 might also might be involved. In short, internet fraud-related charges can prove especially complex and call for the expertise of an experienced fraud lawyer.