We are independent & ad-supported. We may earn a commission for purchases made through our links.

Advertiser Disclosure

Our website is an independent, advertising-supported platform. We provide our content free of charge to our readers, and to keep it that way, we rely on revenue generated through advertisements and affiliate partnerships. This means that when you click on certain links on our site and make a purchase, we may earn a commission. Learn more.

How We Make Money

We sustain our operations through affiliate commissions and advertising. If you click on an affiliate link and make a purchase, we may receive a commission from the merchant at no additional cost to you. We also display advertisements on our website, which help generate revenue to support our work and keep our content free for readers. Our editorial team operates independently from our advertising and affiliate partnerships to ensure that our content remains unbiased and focused on providing you with the best information and recommendations based on thorough research and honest evaluations. To remain transparent, we’ve provided a list of our current affiliate partners here.

What Is Commercial Fraud?

By C. Mitchell
Updated May 16, 2024
Our promise to you
MyLawQuestions is dedicated to creating trustworthy, high-quality content that always prioritizes transparency, integrity, and inclusivity above all else. Our ensure that our content creation and review process includes rigorous fact-checking, evidence-based, and continual updates to ensure accuracy and reliability.

Our Promise to you

Founded in 2002, our company has been a trusted resource for readers seeking informative and engaging content. Our dedication to quality remains unwavering—and will never change. We follow a strict editorial policy, ensuring that our content is authored by highly qualified professionals and edited by subject matter experts. This guarantees that everything we publish is objective, accurate, and trustworthy.

Over the years, we've refined our approach to cover a wide range of topics, providing readers with reliable and practical advice to enhance their knowledge and skills. That's why millions of readers turn to us each year. Join us in celebrating the joy of learning, guided by standards you can trust.

Editorial Standards

At MyLawQuestions, we are committed to creating content that you can trust. Our editorial process is designed to ensure that every piece of content we publish is accurate, reliable, and informative.

Our team of experienced writers and editors follows a strict set of guidelines to ensure the highest quality content. We conduct thorough research, fact-check all information, and rely on credible sources to back up our claims. Our content is reviewed by subject matter experts to ensure accuracy and clarity.

We believe in transparency and maintain editorial independence from our advertisers. Our team does not receive direct compensation from advertisers, allowing us to create unbiased content that prioritizes your interests.

Commercial fraud is a legal term that describes deceptive practices or legal violations committed by corporate executives for financial gain. There are many different kinds of commercial fraud. Some involve misrepresentative statements to the public about corporate performance in order to boost sales or inflate stock value. Failing to disclose certain income on business tax returns can also constitute fraud, as can colluding or self-dealing, insider trading, executive kick-backs, and the misuse of corporate goods for personal gain. Most countries impose criminal fines and sanctions on corporate executives found guilty of commercial fraud.

Fraud laws — that is, laws prohibiting and punishing fraud — are nearly ubiquitous in legal systems throughout the world. In its most basic sense, fraud is any misrepresentation or deception that is (1) intentional and (2) designed for some tangible gain. Commercial fraud is simply a kind of fraud that happens in a corporate setting, usually by and through the actions of corporate executives.

In most cases, commercial fraud involves some kind of misrepresentation that ends with corporate executives making more money or earning more in bonuses than they otherwise would. This includes stock and securities manipulations as well as false testimony, tax return inaccuracies, and schemes to shield money and profits off-shore. Even something as simple as using a corporate account for a family vacation can be seen as company fraud, particularly if the executive writes off that vacation as a business expense. In so doing, he is taking something that is not his, claiming it as his own, and then lying about it.

It can be tempting to think of commercial fraud as somewhat insular: how a company wants to handle its affairs is largely that company’s concern, or so the sentiment goes. To a certain extent, this is true. Most corporations are publicly funded, however. Investors from the private sector often own a significant portion of many businesses in the form of stock shares and futures interests. Fraud and fiscal mismanagement amongst executives defrauds not only the company as an entity, but also every individual investor who owns an interest.

Commercial fraud is also bad for the economy more generally, as it sends a signal that big businesses are unchecked and not to be trusted. This can discourage investments, which can stymie growth. It is for this reasons that governments set and enforce corporate fraud law.

Identifying commercial fraud is usually a job for government enforcement agencies. Individuals can also report corporate fraud. Many governments have established laws that protect employees and others who wish to reporting fraudulent corporate conduct. These laws are often called “whistle-blower” statutes. The main goal of whistle-blower statutes is to encourage people to report questionable practices and incidents of potential business fraud in exchange for immunity and insulation from retaliatory action.

MyLawQuestions is dedicated to providing accurate and trustworthy information. We carefully select reputable sources and employ a rigorous fact-checking process to maintain the highest standards. To learn more about our commitment to accuracy, read our editorial process.

Discussion Comments

MyLawQuestions, in your inbox

Our latest articles, guides, and more, delivered daily.

MyLawQuestions, in your inbox

Our latest articles, guides, and more, delivered daily.