Types of Fraud in Texas

Fraud charges in Texas aren’t just for elaborate Ponzi schemes or shady corporations. They can stem from everyday actions, including using someone else’s credit card, fudging a claim form, or writing a check you know won’t clear. And while fraud might sound like a financial issue, it’s very much a criminal one.

Whether you’re trying to understand what fraud actually looks like, wondering what penalties come with it, or figuring out what to do if you’re under investigation, this article breaks down the different types of fraud in Texas and how the legal system goes after them.

What Is Considered Fraud in Texas?

Under Texas law, fraud occurs when a person intentionally misleads or deceives another person or entity to gain something of value—money, services, or property. This deception can happen through lies, forged documents, or even withholding important facts.

Texas Penal Code Title 7, Chapter 32 specifically outlines fraud offenses. These can range from check forgery to complex insurance scams.

But not all fraud looks the same. Let’s break down the most common types.

Common Types of Fraud in Texas

Let’s take a closer look at some of the most common types of fraud and what makes them illegal under Texas law.

Credit Card or Debit Card Abuse

Using someone else’s card without permission or stealing card information falls under Texas Penal Code §32.31. Even using your own card knowing it’s expired or revoked can count as abuse. This is typically a state jail felony but can escalate depending on the situation (e.g., targeting an elderly person).

Penalty: Depending on the amount stolen or attempted, charges can range from a state jail felony to a second-degree felony.

Identity Theft

Identity theft is covered under Texas Penal Code §32.51. It involves using someone else’s personal information—like a Social Security number or date of birth—without consent. This crime is often linked with credit card abuse, employment fraud, or health care fraud.

Penalty: The number of items possessed (e.g., credit cards, driver’s license numbers) determines the charge, which can go up to a first-degree felony.

Insurance Fraud

This occurs when someone knowingly submits false or misleading information to an insurer for financial gain. Texas Insurance Code Chapter 701 outlines what qualifies as insurance fraud, including staged accidents, inflated claims, or fake medical bills.

Penalty: The punishment depends on the value of the fraudulent claim. A false claim over $200,000 can result in a first-degree felony.

Bank Fraud and Check Fraud

Passing bad checks, forging signatures, or manipulating banking systems for unauthorized gains falls under various laws, including Texas Penal Code §32. Fraudulent activity involving financial institutions can also trigger federal charges.

Penalty: Based on the amount involved, it can range from a Class C misdemeanor to a felony.

Wire Fraud and Mail Fraud

Although these are federal offenses, they often come into play in Texas fraud cases. Using electronic communications or postal services to carry out a fraudulent scheme can trigger federal investigations, especially when the crime crosses state lines.

Penalties: Up to 20–30 years in federal prison and fines up to $1 million, depending on the circumstances.

Health Care Fraud

Health care providers or individuals who manipulate billing codes, submit false insurance claims, or overcharge for services may face charges under both state and federal laws. Medicaid fraud is one area heavily prosecuted by the Texas Attorney General’s office.

Penalties: Up to 10–20 years in prison (or life if it results in death), plus civil fines and restitution.

How Fraud Is Investigated and Prosecuted in Texas

Once a fraud allegation is reported, law enforcement and specialized fraud units begin gathering evidence. This may involve:

• Reviewing financial records
• Interviewing witnesses and victims
• Surveillance or sting operations
• Subpoenaing digital records or emails

Agencies involved may include local police, the Texas Attorney General’s Office, and sometimes the FBI or IRS for more complex or high-dollar cases.

After investigation, prosecutors decide whether to file charges. Fraud can be charged as a misdemeanor or felony depending on the dollar amount involved and other factors like prior convictions or targeting vulnerable individuals. For example:

• Under $2,500: Typically a misdemeanor
• $2,500 to $30,000: State jail felony
• Over $300,000: First-degree felony (the most serious, with up to life in prison)

How Are Fraud Cases Investigated in Texas?

Fraud cases are usually handled by specialized units within local law enforcement or state agencies. For more complex cases, like large-scale identity theft or insurance rings, task forces may include:

• Texas Department of Public Safety (DPS)
• Texas Attorney General’s Office
• Federal agencies (e.g., FBI, IRS, Postal Inspectors)

These investigators look into:

• Financial records
• Surveillance footage
• Emails or texts
• Witness statements
• Forensic accounting data

If a business is involved, auditors may review inventory, receipts, or internal records.

What Happens If You’re Charged With Fraud in Texas?

Fraud charges are serious, but being accused doesn’t mean you’re guilty. If you’re charged, the process typically looks like this:

1. Arrest or Summons: You may be arrested or asked to appear in court.
2. Initial Appearance: A judge informs you of your rights and sets bail.
3. Indictment or Information: The prosecution formally files charges.
4. Plea Bargaining: Many cases are resolved through negotiation.
5. Trial or Dismissal: If it goes to trial, prosecutors must prove you intended to defraud someone.

Possible Defenses in Fraud Cases

Defending against fraud involves poking holes in the prosecution’s case. Common defenses include:

• Lack of Intent: You didn’t knowingly try to deceive anyone.
• Mistaken Identity: Someone else committed the fraud.
• Insufficient Evidence: The prosecution can’t prove their claims beyond a reasonable doubt.

A strong defense strategy often requires forensic accounting, digital data review, and witness testimony. That’s why having an experienced criminal defense attorney is critical.

Arrested? Don’t Plea, Call Me!

Fraud in Texas covers a wide range of offenses—from writing a bad check to running a large-scale scam. And whether it’s handled by state or federal authorities, the consequences can be life-changing.

Knowing how Texas defines and prosecutes fraud is the first step to protecting yourself. If you’re under investigation or have already been charged, don’t wait. Reach out to our fraud defense attorneys who know how to fight these cases.