Criminal fraud is a crime that involves a scheme to cheat or deceive another individual or entity in order to obtain a financial gain or similar type of gain. It is considered a white collar crime. According to criminal fraud law, any action intended to deceive another through false representation of fact that results in legal detriment to the individual who relied on the information can be an act of criminal fraud.
Put simply, if an individual knowing lies about an important or key fact in a transaction or relationship and the other party relies on that misrepresentation of fact and suffers harm, fraud has occurred. It does not occur when an individual provides a fact they believe to be true, even if they are mistaken.
The basic component of all types of fraud is that criminal fraud occurs when:
- An individual lies or conceals a material truth; and
- Another party or entity justifiably relies on that false information; and
- That party suffers an injury based on their reliance.
There are several elements of criminal fraud. In order for an individual to be convicted of criminal fraud, the prosecution must prove:
- There was a misrepresentation of a material fact;
- By an individual who knew the material fact was false;
- And intended to defraud;
- A person or entity who justifiably relied on the misrepresentation of fact; and
- The individual or entity suffered actual injury or damages as a result of their reliance on that false fact.
What Is The Difference Between Criminal Fraud And Civil Fraud?
The basic elements of fraud in both civil fraud cases and criminal fraud cases are the same. A criminal fraud conviction, however, can result in fines and/or jail time. In addition, criminal law has a higher standard of proof, which is beyond a reasonable doubt. Each element of the crime, discussed above, must be proven beyond a reasonable doubt in order for a defendant to be convicted.
In criminal fraud cases, whether or not the fraud was actually successful is not a factor. The mere fact that an individual attempted and intended to commit fraud is enough. Depending on the jurisdiction and the facts of the case, criminal fraud may be charged as a misdemeanor or a felony crime.
In civil fraud cases, the individual who was the victim must prove the fraud elements discussed above and prove they suffered damages as a result of the fraud. The difference between a civil and criminal fraud case is that in a civil case, the individual must show actual damages and in a criminal case the prosecution only needs to show that the defendant attempted fraud.
What Is Telemarketing? What Is Telemarketing Fraud?
Telemarketing is the act of selling goods and/or services over the telephone. Automated telemarketing calls which feature a recorded sales pitch, sometimes referred to as “robocalls,” are largely illegal especially when they involve telemarketing fraud. The Federal Trade Commission (“FTC”) has made it illegal to use pre recorded telemarketing calls, unless the telemarketer has obtained the express written permission of the person who is being called.
Additionally, there are many state laws in place which further regulate robocalls. Depending on the specific state, a telemarketer may need to do any or all of the following in order to legally telemarketer:
- Obtain a license;
- Only call during certain hours;
- Make specific disclosures; and/or
- Ask for permission to continue the call once they have identified themselves as telemarketers.
An example of this would be how in California, a live person must identify the source of the call. The recipient of the call must then consent to hear the recorded message, and the call must be disconnected once the recorded pitch concludes.
To reiterate, fraud is the act of making a statement with the intent to deceive the recipient by falsely representing a fact. This misrepresentation of the fact is what causes the victim to rely on it when making a decision, and to their legal detriment.
Telemarketing fraud, then, refers to the making of a false statement of a fact over the telephone in order to induce a victim to make a financial transaction. Telemarketing fraud occurs when someone calls a victim and makes a false statement to them. The misrepresentation causes the victim to complete a financial transaction with the caller that they otherwise would not have made.
Telemarketing fraud generally takes the following forms:
- Prize offers;
- Sweepstakes winnings;
- Receiving free and/or discounted anti-virus software from an unfamiliar company;
- Illegitimate credit card offers, magazine sales, and loan offers;
- Work from home programs offered by an unfamiliar company; and
- Fraudulent vacation offers.
How Is Telemarketing Fraud Prosecuted?
As previously mentioned, The Federal Trade Commission (“FTC”) is responsible for proving that an individual is guilty of telemarketing fraud. Once someone has filed a complaint with the FTC, the agency investigates the complaint; if a violation has in fact occurred, the agency will begin adjudication proceedings in order to prosecute the violator. Additionally, each state maintains its own telemarketing fraud laws, and may pursue the scammers as well.
The FTC may take action when receiving:
- Letters from consumers and/or businesses;
- Pre-merger notification filings;
- Congressional inquiries; and/or
- Articles on consumer or economic subjects.
If the FTC believes that a company has violated a fraud or consumer protection law, the Commission may first attempt to obtain voluntary compliance by entering into a consent order with the company. Essentially, this means that the company agrees to stop its practices. However, if the FTC cannot reach such an agreement, the Commission may issue an administrative complaint or seek injunctive relief from the courts.
If a violation is indeed found, the violating company may be ordered to cease and desist. The FTC may also issue Trade Regulation Rules. It is important to note that the FTC’s investigations are generally non-public in an effort to protect the investigation, as well as the companies that are involved. During the rulemaking proceedings, however, the public is allowed to attend hearings and file written comments regarding a proposed rule.
What Defenses Can I Use If I Am Being Accused Of Telemarketing Fraud?
The penalties for a criminal fraud conviction will vary according to:
- Jurisdiction;
- The severity of the fraud;
- The person or entity that was a victim of the fraud; and
- The amount of money or property that was lost as a result of the fraud.
A conviction of criminal fraud may include penalties such as:
- Jail or prison time;
- Probation or parole;
- Fines; and/or
- Restitution.
A court will consider the following information:
- The severity of the fraud;
- Whether the defendant has any prior convictions, especially those involving fraud;
- Whether the defendant is currently on probation or parole;
- The amount of money or property that was stolen by the defendant; and
- The person or entity that was the targeted victim.
There are a number of defenses that may be available to those charged with telemarketing fraud. However, the specific defenses available to you when facing telemarketing fraud charges will vary according to the circumstances involved. Two of the most common defenses include:
- No Intent: In order to commit telemarketing fraud, a person must intend to make a fraudulent statement. A defendant may attempt to prove that they had no intent to deceive the victim; and
- No Fraudulent Statement: Another element is communicating a fraudulent statement to the victim in order to induce them into relinquishing money or property. A defendant may assert that no false statement was made, or that the false statement was actually a mistake.
Do I Need An Attorney For Telemarketing Fraud?
If you are involved in telemarketing fraud, whether as the plaintiff or the defendant, you should contact an experienced and local fraud lawyer. An attorney can help you determine your rights, legal options, and available defenses based on your state’s specific laws. Additionally, your criminal attorney will also be able to represent you in court as needed.
