What is credit fraud?
Fraud in terms of a Loan
Credit fraud is a criminal offense, which is defined in the Criminal Code under 265b. The definition implies that only companies can commit credit fraud to other companies. For individuals trying to obtain a loan unlawfully, the more common offense is fraud related to borrowing.
When do companies commit credit fraud?
Companies commit credit fraud when they knowingly provide false or incorrect information related to lending. This is the case, for example, when a company submits incorrect balance sheets in the course of the application review, which results in a significantly better liquidity and credit situation for the company. Also, credit fraud is when the company is withholding important information. For example, if there is already a high payment obligation to another bank, which the entrepreneur does not reveal, this is also considered a fraud in most cases.
The offense is independent of the payment of the loan. If the lender uncovers the misstatements in the application process and therefore does not pay the loan, the company is still liable to prosecution. There is one exception, however: if the borrower has given false information and prevents the payment of the loan, this is not considered a credit fraud. Therefore, if an entity reveals the misstatements and prevents them from paying out after approval of the loan, but before the loan is disbursed, it has not been prosecuted.
In addition, only false information or concealed information are punishable, which are relevant for the credit decision. This means that misstatements remain unpunished if they are not relevant to the credit decision. Wrong contact details or a wrong company address in the application usually do not meet the offense.
What is the penalty for credit fraud?
According to the Criminal Code, the possible penalty for credit fraud is between a fine and a maximum of three years in prison. The amount of the penalty ultimately depends on the individual case. An entrepreneur who makes false claims on a loan for a new vehicle will receive a lesser penalty than an entrepreneur seeking to raise millions of dollars in credit.
Credit fraud in private individuals
For individuals, the offense credit fraud does not apply. If you apply for a loan on false terms as a private individual, this is only considered fraud. The penalty for this depends on the damage caused. The theoretical maximum penalty is ten years in prison. In most cases, however, the sentence will be significantly lower. In addition, the offense is only met, if actually a damage was caused. If the bank notices the incorrect information in the application process, you will not receive any credit, but as a rule you will not have to fear further consequences.