Embezzlement is secretly stealing money or property that was entrusted to your care, usually by an employee taking from an employer. Fraud is broader: deceiving someone to gain money or an unfair advantage. An accountant siphoning company funds is embezzlement; someone lying on a loan application is fraud.
The core difference
Embezzlement is stealing what was entrusted to you, while fraud is deceiving someone, entrusted or not, for gain.
- embezzlement — secretly stealing money or property entrusted to your care: The accountant was jailed for embezzlement after diverting company funds into a personal account.
- fraud — deceiving someone to gain money or an unfair advantage: She was charged with credit card fraud.
How to tell them apart
The key test is trust. Embezzlement requires that the money or property was already lawfully in your care, a treasurer with access to charity funds, an employee with access to company accounts, before you divert it for yourself. Fraud does not require that prior trust; it just requires deception aimed at gaining money or an advantage, from a stranger, a customer, or an institution.
Because embezzlement always involves a kind of deception too, concealing the theft from the person who trusted you, it is often described as a specific type of fraud. The mix-up in everyday use tends to happen in financial news, where both words get applied to the same scandal depending on which angle is being reported.
