Is Fraud a Felony? Understanding Fraud Charges

Published June 23, 2024

Fraud, a common type of white-collar crime, involves intentional deception and the presentation of false information for personal or financial gain. While fraud can manifest in various forms—such as identity theft, credit card fraud, and embezzlement—the question often arises: when does fraud escalate from a simple misdemeanor to a felony?

In This article, we’ll discuss everything you need to know about what constitute a fraud. We’ll get nerdy about legal definitions and considerations revolving around the crime. Let’s start. 

What Is Fraud?

Fraud concern itself with the intentional deception to acquire something of value, typically money. One commit fraud through false statements, misrepresentation, or dishonest conduct intended to deceive and mislead. 

When Is Fraud a Felony?

Fraud is one of the most prevalent types of white collar jobs. It involves deception and the representation of mistrue data for personal or financial gain. Even without boldly injuries, the crime can still render harm like loss of a life investment, which still counts as damages. 

Therefore, fraud can be handled as a criminal or civil case, and sometimes both. In a civil lawsuit, the victim will be seeking compensation for any financial and non-monetary damages they’ve suffered from the defendant’s fraudulent acts. 

As a criminal case, fraud can be classified either as a misdemeanor or a felony. 

When Does Fraud Become a Felony?

Fraud is classified a felony based on factors such as: 

• Monetary value: The amount of money or value of goods in the fraudulent act. Higher amounts typically warrant felony charges. 
• Type of fraud: Certain types of fraud, like identity theft or credit card fraud, may automatically be considered felonies due to their severity. 
• Intent and deception: The intent to deceive and the extent of deception can influence whether the fraud is charged as a misdemeanor or felony.
• Victim impact: The number of victims and the impact on them can elevate the seriousness of the offense. 
• Repeat Offenses: Prior convictions for similar crimes can direct in felony charges for subsequent offenses. 

Types of Fraud

The term fraud covers a wide range of crimes. In most instances, its cases invovlve deception that the culprit uses to their advantage. Many fraud schemes involve stealing others’ Social Security numbers or sensitive data. Other scams may involve computer viruses or malware spread through hyperlinks in phishing emails. 

Fraud offenses include the following, mainly:

1. Insurance fraud

This type of fraud can include numerous variations. For example, if insurance agents keep insurance premiums for themselves rather than save them to the underwriter. Health insurance fraud works similarly. The Federal Bureau of Investigation (FBI) estimates insurance fraud costs Americans approximately $40 billion yearly. 

2. Credit card fraud

This involves taking someone’s credit or debit card information and buy goods or services with it. Fraudsters may use the data to craft a counterfeit card for purchases or other monetary gain. It is a form of identity theft. 

3. Mail fraud 

This involves using the United States Postal Service (USPS) to commit fraud. If someone mails a contract regarding a fraudulent deal via the USPS, the government could likely secure a fraud crime against the person who crafted the contract. 

4. Securities fraud

Securities fraud happens when someone makes a false representation with regards to the value of a company’s stock value. It may require someone to make a financial decision based on the false representation. Insider trading is also one example of securities fraud. 

5. Check fraud

This involves someone making counterfeit checks to defraud another. A scenario would be attempting to provide a back check to a bank to withdraw money that isn’t theirs. 

6. False representation

This happens when someone displays wrong data as if they are accurate. A business owner who knowingly left out a material fact about the company’s finances before selling the company would be likely proven guilty of defrauding the buyer by a court. 

7. Mortgage fraud

This variation involves misrepresentation on mortgage documents. For one, someone lying about the value of their real estate. 

8. Wire fraud 

This involves employing electronic communication, such as email, to commit fraud. Phishing schemes are examples of it. Scams committed over the phone, such as tricking someone to buyin gift cards, also constitute wire fraud. 

9. Welfare fraud

This occurs when someone receives government benefits through false representation. If someone falsely claims they are disabled and subsequently receive disability benefits, they have committed welfare fraud. 

Fraud Charges

Fraud is acknowledged a criminal offense. But a person alleged to have committed the crime can also be taken to civil court. 

For possible penalties, they are: 

• Fines: Financial penalties can be substantial. 
• Restitution: Paying back the defrauded amount to the victim. 
• Imprisonment: Jail or prison senteces, especially for felonies. 
• Probation: Supervised release with conditions. 
• Community Service: Mandatory service hours.