Guide to Fraud Laws in the U.S.

Guide to Laws About Fraud and Fraudulent Activities in the United States

Fraud is a serious offense that involves intentional deception for financial gain. Various federal and state laws address different aspects of fraud. These laws handle a wide range of fraudulent activities, including forgery, identify theft, health care fraud, mail and wire fraud, bank fraud, and securities fraud.

What are the types of fraud?

  • False pretenses or false representation: Lying to convince someone to part with money or property.
  • Forgery: Creating fake documents or signatures.
  • Embezzlement: Stealing entrusted funds or property.
  • Ponzi schemes: Using money from new investors to pay off previous ones, creating an illusion of returns.
  • Deceptive business practice: Some forms of deceptive business practices or trade practices may rise to the level of fraud.
  • Mail and wire fraud: Using the mail or electronic communications to commit fraud.
  • Identity theft: Using someone’s identity or identifying information for fraudulent purposes.
  • Credit card fraud: Using someone else’s credit card without authorization.
  • Bank fraud: Fraudulent activities related to banks, such as false loan applications or check forgery.
  • Securities fraud: Deceptive practices in securities (stock) trading.
  • Health care fraud: Fraudulent billing practices in health care.

What are the federal laws on fraud?

  • Mail and wire fraud laws: 18 U.S.C. § 1341 and 18 U.S.C. § 1343. These laws prohibit using US postal service mail services or electronic communications to defraud others. Includes activities like phishing emails. Penalties include fines and imprisonment.
  • Deceptive business practices laws: The Federal Trade Commission (FTC) enforces consumer laws against deceptive and misleading trade and business practices.
  • Securities fraud laws: 15 U.S.C. § 78j(b) and 17 C.F.R. § 240.10b-5. Pertains to deceptive practices in securities trading. The Securities and Exchange Commission (SEC) enforces these laws. Violators may face civil and criminal penalties.
  • Bank fraud law: 18 U.S.C. § 1344. Covers fraudulent activities related to banks, such as false loan applications or check forgery. Penalties include imprisonment and fines.
  • Identity theft law: 18 U.S.C. § 1028. Prohibits stealing someone’s identity for fraudulent purposes. Aggravated identity theft carries mandatory minimum sentences.
  • Health care fraud law: 18 U.S.C. § 1347. Targets fraudulent billing practices in health care. Penalties include imprisonment and fines.

What are the state laws on fraud?

  • Civil fraud laws: State laws on fraud vary but generally involve intentional misrepresentation leading to financial harm. To prove someone has committed fraud against you, you would need to show that:
  1. They made false representations
  2. You relied on their representations
  3. You lost money or other tangible things (damages)
  • Consumer protection laws: In addition to federal consumer law, many states have consumer protection statutes addressing deceptive trade practices.

What are some ways someone could defend themself against charges of fraud?

Common defenses against accusations of fraud include lack of intent, mistake, or lack of evidence.

Exercise Your Rights

How do I report fraud?

If you suspect you have been defrauded, report it to law enforcement and/or relevant agencies, including the department of consumer affairs.

How do I prevent or protect myself against fraud?

Protect yourself by being cautious online and verifying all information that someone is giving you.

What can I do if I have been defrauded?

If you are the victim of fraud, you can report the fraudulent activity to law enforcement, and talk to a consumer protection lawyer or civil litigation lawyer.

Also see our Guide to Victims Rights.


Photo credit: Image by redgreystock on Freepik

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