Fraud

Two elements recur in almost every legal definition: dishonest intent and a resulting gain or loss. The deception can be a lie, a hidden fact, a false document or an abuse of a position of trust. Accidental error is not fraud, however costly. Definitions differ by country, and some laws describe several separate offences, but practitioners use the word broadly for any intentional trick to take value. Fraud can be committed by outsiders against an organisation, by insiders, or by an organisation against customers or investors. Types are named by the victim or method, such as card, insurance, procurement or accounting fraud. The fraud triangle, a common model of why it happens, points to pressure, opportunity and rationalisation. Investigators, auditors and compliance teams all start from the same question: was there intent to deceive, or only an error?

A used-car seller winds back the odometer on a vehicle and tells a buyer it has covered 60,000 kilometres when the real figure is nearly 160,000. The buyer pays the higher price based on that statement. Later a mechanic finds wear that does not match the reading. The seller's lie, made knowingly to gain money, is the fraud, whereas a seller who sincerely believed the reading would have made a mistake.