Fraud

According to Act C of 2012 on the Criminal Code, the statutory definition of fraud is as follows:
 Fraud is committed by anyone who, for the purpose of unlawful gain, deceives another person or fails to correct a false belief, thereby causing pecuniary loss.

The legal interest protected by the offence of fraud is property rights. Property rights may be infringed if the perpetrator deceives the passive subject.

The passive subject of the crime is the person deceived. Importantly, this person is not necessarily the same as the victim who suffers the damage; the two may differ.
 For example: if the perpetrator, with the concealed aim of acquiring money, tells the owner’s brother that the owner promised him the bicycle, and the brother, believing this, lends the bicycle to the perpetrator, who then quickly sells it, the passive subject is the deceived person – the brother – while the victim, who suffers the pecuniary loss, is the owner.

The act of fraud is either deception or failing to correct a false belief.

• Deception means that the passive subject’s perception does not reflect the objective reality or does so only partially.
• Failing to correct a false belief occurs when the passive subject already has false beliefs independently of the perpetrator, who recognises this but fails to correct them.

Thus, failing to correct a false belief usually takes the form of omission. Such an obligation to inform may arise from contractual relations, moral or ethical expectations, or from the principles of good faith and fairness.

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Fraud is established only if, as a result of the deception or of failing to correct a false belief, the passive subject performs a transaction affecting property, which causes pecuniary loss either to them or to another victim.
 Such a transaction may include paying money, handing over an item, or even forgiving a debt owed by the perpetrator.
The criminal law concept of damage differs from that used in civil law. As a rule, criminal law recognises only the reduction of the value of property, not lost profits or unrealised benefits.
 However, in relation to fraud, the Criminal Code expressly provides that the unpaid value of a service used also qualifies as damage (e.g. using a hotel room or renting a flat without paying).
A key requirement is causation: the pecuniary loss must occur as a direct result of the deception or failing to correct a false belief by the perpetrator and the subsequent transaction of the passive subject.

The perpetrator must have the purpose of unlawful gain at the time of the fraudulent conduct. Sometimes deception may be used to conceal an earlier offence (such as embezzlement or misappropriation).
 If the intention is not to obtain new gain, but merely to avoid liability for damages, the act does not amount to fraud.
 However, where the perpetrator seeks to avoid paying damages or compensation by misleading conduct, the intent of unlawful gain is present.

The number of victims determines how many counts of fraud are established.

In criminal proceedings, great emphasis is placed on the assessment of evidence, expert opinions, and witness testimonies.

Fraud is considered more serious if committed:

• in criminal association,
• at the scene of a public emergency, or
• on a commercial scale.

The seriousness of the offence also depends on the amount of pecuniary loss caused, as in the case of theft.
 Since 1 July 2013, it has been expressly provided that:

• if fraud is committed by pretending to collect charitable donations, it constitutes a criminal offence even below the petty offence threshold;
• it is also aggravated if committed against an elderly or disabled person who is less able to recognise or prevent the fraudulent conduct.

The Criminal Code punishes several specific fraudulent behaviours in separate provisions. In such cases, the conduct is not classified as fraud, but under the relevant specific offence. Examples include:

• budgetary fraud,
• investment fraud,
• fraud committed by the use of an information system (regulated since 2013), and
• economic fraud.

Fraud committed via an information system covers, for instance, the use of forged or unlawfully obtained electronic payment instruments.
 Economic fraud is committed by anyone who, for the purpose of unlawful gain, carries out a fictitious economic activity, thereby causing pecuniary loss. This was introduced because state-owned companies were repeatedly harmed by such schemes, causing damages of billions of forints.
Fraud rarely concurs with budgetary fraud or counterfeiting of currency. For example, if someone avoids paying taxes by deceiving the tax authority, it is budgetary fraud, not fraud.
 If the perpetrator falsifies a private document to commit fraud, they are liable for both fraud and document forgery.
Fraud may also constitute an administrative offence: if the pecuniary loss does not exceed HUF 50,000, the act constitutes an administrative offence, except in the aggravated forms listed above.

A special rule provides that if the victim is a relative of the perpetrator, fraud is punishable only upon a private motion, unless the perpetrator is also the victim’s guardian or curator.
 Another important rule: the perpetrator is exempt from punishment – or their punishment may be unconditionally reduced – if, before the indictment, they admit the offence and, in the framework of mediation, compensate the victim in a manner and to the extent accepted by the victim.