WHAT BUSINESSES NEED TO KNOW ABOUT CIVIL FRAUD
Fraud is an ever-present feature of commercial life. Every industry in every jurisdiction must grapple with fraud in one way or another – whether it is rooting out fraud within a company or remedying fraud inflicted on the company.
Yet civil fraud – versus its criminal counterpart – attracts comparatively little attention. Part of the problem is that discussing ‘fraud’ as a unitary subject is daunting. Even within the US alone, there are scores of different types of civil fraud with varying legal elements and remedies.
Businesses need to take civil fraud seriously. Every year, companies pay billions of dollars to resolve civil fraud allegations, without accounting for the costs of investigating and defending against the allegations.
And what begins as a civil fraud case can quickly turn into a criminal fraud case, as prosecutors sometimes file criminal charges even years after a civil case is resolved. At the same time, businesses victimised by fraud can use often the same laws to recover losses.
Civil fraud
‘Fraud’ is notoriously difficult to define. Any definition will be subject to exceptions and qualifications. But at a high level, ‘fraud’ means a knowing misrepresentation or other deception made to induce someone else to act to his or her detriment.
Civil and criminal fraud share more similarities than differences. In fact, the same facts can and sometimes do lead to separate civil and criminal fraud cases. The primary differences are procedural.
Only the government can pursue a criminal case, which must be proved beyond a reasonable doubt. By contrast, private plaintiffs can obtain monetary damages in civil fraud cases by meeting a lower standard of proof – typically a preponderance of the evidence standard.
Jan-Mar 2026 issue
MoloLamken LLP