Civil fraud examples – What is civil fraud?

Fraud is a legal term that can be applied to a wide range of different scenarios and acts. Generally, it aims to cover instances where an individual has intentionally lied in order to cause themselves to gain or cause another to suffer a loss.

As it’s such a broadly applicable term, it can sometimes be a little confusing, especially when you hear it in so many different contexts. With some important nuances between criminal and civil fraud, it’s important that you’re clear on the matter of those differences.

 

Civil fraud defined

Civil fraud consists of a civil (in other words, non-criminal) claim being made against an individual, with the primary aim being to recover any lost assets. Civil claims are brought forward by individuals, not by the CPS (crown prosecution service) and as a result, the evidence will not be gathered by the police, but by other parties such as solicitors.

The court will generally only be able to order the payment of compensation, as civil courts are not authorised to hand out sentences (whether fines, community service orders or custodial sentences) in the way that criminal courts can.

As civil fraud is not a criminal matter, it will typically be dealt with in a somewhat less ‘formal’ manner compared to criminal cases. Definitions may be slightly looser, and the burden of proof is much lower. Below are some common examples of acts that might be heard in civil fraud cases.

 

Examples of civil fraud

Double invoicing

Double invoicing is a common form of fraud, where a business or contractor will send their customer two different invoices for the same product or service, which will then often be paid automatically without it being checked.

Charity fraud

Charity fraud is a very common type of fraudulent activity, whereby an individual or group will set up a fake charity, in order to solicit donations from unsuspecting individuals, who believe they’re contributing to a legitimate cause.

Dishonest directors fraud

In these instances, directors of a business will abuse their position of power for a number of different reasons, causing loss to the business under their control. They may steal directly from the business, or otherwise manipulate the business to bring about personal gain.

 

Civil fraud vs criminal fraud

If you have even limited familiarity with criminal fraud, you’ll likely have noticed that the examples listed above can often apply to both civil and criminal instances of fraud. This is because there is often very little difference between the nature of the acts that will be heard in criminal and civil cases.

In fact, it’s likely that those facing civil fraud proceedings will also face criminal proceedings, potentially even at the same time. A claimant may look to go through the civil court in addition to a criminal court for a number of reasons. 

The most significant reason is that while in a criminal court, the burden of proof is quite high (‘beyond reasonable doubt’), in a civil court, the burden is much lower (‘on the balance of probabilities’). This means that if someone is seeking to get money or assets back that they believe they were defrauded of, a civil court will be more likely to side with the claimant than a criminal court would.

 

Pre-action letter of claim

According to the Civil Procedure Rules 1998 (CPR) which governs exactly how civil claims must be brought forward, before a case can be heard in a civil court, the claimant must send the defendant a pre-action letter of claim.

This letter should include the details of the claim, and aim to deal with the matter outside of the court system. If the defendant still has not aimed to make restitutions, only then can it proceed to the court system. If you are a defendant in a civil fraud case and have not received a letter before claim, you should seek legal advice on what to do next. 

 

Repercussions of being found guilty of civil fraud

As a civil court is unable to hand out criminal sentences, if you are found guilty of civil fraud you will not face a custodial sentence or other criminal sanctions. You can however be ordered to repay the claimant any assets of funds that they were able to prove on the balance of probabilities that you defrauded them of.

If you are found guilty of civil fraud, it’s possible that you will also be found guilty in a criminal court of fraud charges. As the burden of proof is higher, it is also possible that there will not be enough evidence to prove beyond a reasonable doubt that you’re guilty. No matter what you think about the case, it will always be necessary to seek the professional advice of a criminal defence solicitor for further advice on your specific court case.

 

Seeking legal advice

As we’ve seen, while civil fraud cases are technically different to criminal fraud cases, they are by no means mutually exclusive. If you currently face civil fraud proceedings, it’s likely that you are also under investigation for criminal fraud. Even if your case is limited to a civil court, it’s still important that you seek legal assistance.

Your solicitor will be able to provide you with invaluable legal advice to help you fight the charges you’re facing. In the civil context, this will be towards the aim of ensuring that you don’t have to pay any compensation to the party bringing the case against you. In a criminal context, the aim will be to ensure that you don’t receive a criminal sentence, whether that’s a fine, custodial sentence, or community service order.

If you’re likely going to face both civil and criminal proceedings, it will generally be best to have the same legal team to defend you in both cases. They will be able to carry out similar kinds of research and preparation for both cases, likely saving you money and resources as a result while maximising your overall chances of success.