by Definition of White-Collar Crime
The most influential criminologist of the 20th century and also a sociologist, Edwin Hardin Sutherland, for the first time in 1939, defined white collar crimes as “crimes committed by people who enjoy the high social status, great repute, and respectability in their occupation”. The five attributes of the given definition are:
It is a crime.
That is committed by an important person of the company.
Who enjoys a high social status in the company.
And has committed it in the course of his profession or occupation.
There may be a violation of trust.
Types of White-Collar Crimes
Fraud: Fraud is a broad term that encompasses several different schemes used to defraud people of their money.
Credit card frauds: These frauds are committed when one person uses the credit card of another person unauthorizedly to obtain goods of value, he is said to have committed credit card fraud
Fraud with the insurance company: Sometimes the case may be that people use false documents to obtain insurance from the insurance company. For example, a person can fake the price of her property by raising its value on the fake documents and obtain insurance for that fake amount. They make the papers in such a way that it seems legitimate and insurance company get defrauded.
Fraud in buying and purchasing of securities: When the broker of a company wrongfully shows the inflated price of stocks in order to make people invest in his stock, it is called securities fraud.
Fraud over calls: Commonly known as telemarketing fraud, these frauds are made over the phone calls. Here, a person is approached to make an investment for building a charitable organization, or asks for their bank account details to obtain a certain amount for charitable purposes. The amount received is then used for any other purpose other than the one it has been taken for.
Bank fraud: Bank fraud is a criminal act where a person, by illegal means, withdraws either money or assets from the bank. The fraud can also occur when a person falsely represents himself to be a bank or financial institution and withdraws money or assets from the people.
Insider trading: Insider trading is trading done with the benefit of the trader possessing material, non-public information that gives him or her an advantage in the financial markets. For example, an employee at an investment bank may know that Company A is preparing to acquire Company B. The employee can buy stock in Company B with the expectation that the company’s stock will rise significantly in price once the acquisition becomes public knowledge.
Ponzi scheme: Named after Charles Ponzi, the original perpetrator of such a scheme, a Ponzi scheme is an investment scam that offers investors extremely high returns. It pays such returns to the initial investors with the newly deposited funds of new investors. When the scammer is no longer able to attract a sufficient number of new clients to pay off the old ones, the scheme collapses like a house of cards, leaving many investors with huge losses.
Cybercrimes: As the use of computer and internet is increasing, so is the crime related to it. Two Main Types of Cybercrimes, Criminal activity that targets computers & Criminal activity that uses computers.
Phishing: Phishing is a type of fraud that involves stealing personal information such as Customer ID, IPIN, Credit/Debit Card number, Card expiry date, CVV number, etc. through emails that appear to be from a legitimate source.
Impersonation and identity theft: Impersonation and identity theft is an act of fraudulently or dishonestly making use of the electronic signature, password or any other unique identification feature of any other person.
Spamming: Spamming occurs when someone receives an unsolicited commercial message sent via email, SMS, MMS and any other similar electronic messaging media. They may try to persuade the recipient to buy a product or service, or visit a website where he can make purchases, or they may attempt to trick him/ her into divulging bank account or credit card details.
Ransomware: Ransomware is a type of computer malware that encrypts the files, storage media on communication devices like desktops, Laptops, Mobile phones etc., holding data/information as a hostage. The victim is asked to pay the demanded ransom to get his device decrypts
Data Breach: A data breach is an incident in which information is accessed without authorization.
Cyber-Squatting: Cyber-Squatting is an act of registering, trafficking in or using a domain name with an intent to profit from the goodwill of a trademark belonging to someone else.
Denial of Services (DoS) attack: A denial of Services (DoS) attack is an attack intended for denying access to computer resources without the permission of the owner or any other person who is in charge of a computer, computer system or computer network. A Distributed Denial of Service (DDoS) attack is an attempt to make an online service unavailable by overwhelming it with traffic from multiple sources.
Embezzlement: When a person who has been entrusted with money or property to use it for his own use and benefits starts using it any manner other than what it has been given for in an illegal manner then the person would be liable for embezzlement. The act of embezzlement may be characterized as criminal breach of trust which has been defined in section 405 of the Indian Penal Code, 1860. It defines criminal breach of trust as an act where a person who has been entrusted with a property misappropriated it or falsely converted it to his own use or dispose of it without any law allowing him to do so. Embezzlement is a misappropriation of someone’s property where a person has an intent to cause loss to the other person and criminal misappropriation is an offence under Section 403 of the Indian Penal Code, 1860.
Counterfeiting: Counterfeiting is a criminal act defined under section 28 of the Indian Penal Code, 1860, where the imitation of something authentic takes place in order to steal, destroy or replace somebody’s original work. This facilitates gaining profits from illegal transactions and deceiving a person who believes that the representation is made to him is true and the imitated work is of more value. The crime of using counterfeiting is generally related to coins and currencies and is punishable under section 489B of the Indian Penal Code, 1860. In some cases, it also relates to imitating of products like clothes, bags, shoes, watches, art, toys, etc. Counterfeit products carry fake logos and brand names and, in some products, harmful chemicals have also been found leading to the death of the person using it
Money laundering: Money laundering is turning “dirty” money “clean” by making it look like money from crimes actually came from legitimate sources. Money Laundering occurs when unclean cash is filtered through a legitimate business. Unclean cash is any money made through illicit means, such as drug trafficking and terrorist activities. The money needs to be clean or laundered through a legitimate business to make it look like it was earned lawfully. Money laundering allows criminals to hide and accumulate wealth, avoid prosecution, avoid taxes, increase profits through reinvestment, Fund further criminal activity.
Espionage: Espionage, or spying, is typically a white-collar crime. For example, an agent of a foreign government that wants to obtain part of Apple Inc. technology might approach an employee at Apple and offer to pay them $10,000 if they will provide a copy of the desired technology.
Bribery: Bribery is a white-collar crime where a person asks for money, or a favor, or something of value in order to get the other person’s work done. For example, if an electoral officer asks a person to offer him wine and only then will he be allowed to give vote, it would amount to bribery. The punishment for bribery has been provided under Section 171E of the Indian Penal Code, 1860 which says that any person who commits such an offence would be imprisoned for a term which may extend to 1 year or with fine or both. Also, Section 13 of the Prevention of Corruption Act, 1988 has penalized acts constituting an offence under this head, being engaged in by public officials.
Extortion: Extortion is a crime under section 383 of the Indian Penal Code, 1860. When one party coerces another party for payment of money, or property or services, he is said to have committed the crime of extortion. It is called a white-collar crime because an officer may use his official right and make use of his higher position in the company to threaten another person for giving money, or transferring property, or for providing services.
Reasons for the growth of white-collar crimes in India
Greed, competition and lack of proper laws to prevent such crimes are the major reasons behind the growth of white-collar crimes in India.
Greed: The father of modern political philosophy, Machiavelli, strongly believed that men by nature are greedy. He said that a man can sooner and easily forget the death of his father than the loss of his inheritance. The same is true in the case of commission of white collar crimes. Why will a man of high social status and importance, who is financially secure, commit such crimes if not out of greed?
Easy, swift and prolong effect: The rapid growing technology, business, and political pressure has introduced the criminals to newer ways of committing white collar crimes. Technology has also made it easier and swifter to inflict harm or cause loss to the other person. Also, the cost of such crimes is much more than other crimes like murder, robbery or burglary, and so the victim would take time to recover from it. This would cut down the competition.
Competition: Herbert Spencer after reading ‘On the Origin of Species’ by Darwin, coined a phrase that evolution means ‘survival of the fittest’. This implies that there will always be a competition between the species, and the best person to adapt himself to the circumstances and conditions should survive.
Lack of stringent laws: Since most of these crimes are facilitated by the internet and digital methods of transfer payments, laws seem reluctant to pursue these cases as investigating and tracking becomes a difficult and complicated job. Why it becomes difficult to track it is because they are usually committed in the privacy of a home or office thereby providing no eyewitness for it.
Modern technology: With modern technology ease of business is one of its expectations, in a sense, it also applies to white-collar crimes which have allowed them to reach out to a larger number of people and commit large scale crimes without being noticed by the law. Many have fallen victim to different scams such as the credit card scam, moreover, the pandemic opened up a new market for them by exploiting the medical field and creating a black market for Covid medications such as “Remdesivir” and over a hundred cases were lodged against the illegal sales and use of this medicine and in most cases, the Doctors and Hospital staff were involved. The need and greed of people have driven them to the extent of exploiting any possible field. It doesn’t stop there the development in technology is so rapid that people can acquire nuclear weapons with a click of a button, this was the case in Mumbai when authorise seized two people acquiring 7kgs of natural uranium which is highly radioactive and dangerous to human life. This makes us question the level of threat that these cartels and organizations impose on the nation and the level of sophistication these crimes have reached for the personal gains of their lives.
Lack of awareness: The nature of white-collar crimes is different from the conventional nature of crimes. Most people are not aware of it and fail to understand that they are the worst victims of crime. People who are victims of these crimes fail to comprehend the notion of the crime and understand the exact offence which has been committed and whom to approach or lodge a complaint against because most of the time it involves a large corporation and there may be little or no evidence to essentially produce a criminal and in certain crimes such as scam or fraud people may not even realize that they have fallen victim to a crime such as a bank fraud where yearly there are over thousand cases registered.
Competition: We live in a fast pace world where only the fittest can survive and it has grown to such an extent that crimes are committed for survival especially belonging to the lower socio-economic classes their work environment is poorly designed and they are often underpaid so in order to earn more and make a decent living their moral and ethnic values may be compromised and just to move out of poverty or to make more gains their behavior cannot rationalized and is often out of greed that they have no limits. Criminal organizations and cartels are also multiplying and advancing in their methods due to this competition.
Necessity: People also commit white collar crimes to meet their own needs and the needs of their family. But the most important thing that the people of high social status want to feed their ego.
Chronological background: Popularly known as the Carrier’s case, it was the first case of white collar crimes which was documented in the year 1473 in England. In this particular case, the agent was entrusted with the responsibility of the principal to transport wool from one place to another. The agent was found guilty of stealing some of this wool. The English Court after this case adopted the doctrine of ‘breaking the bulk’ which means that the bailee who was given the possession of goods tried to break it open and misappropriate the contents.
However, the growth of industrial capitalism has taken criminality to the next level. The bourgeois institution dwells into committing such crimes out of greed and misery to have and to be able to attain more. In 1890 in America, the Sherman Antitrust Act was passed, which made monopolistic practices illegal. The penalties imposed on offenders of white-collar crimes in Great Britain and the adoption of competition or antitrust laws by other countries were not as sweeping as the Sherman Act.
Distinguish White collar crime from traditional Crime
Characteristics of White-Collar Crime
Non-Violent: Unlike traditional crimes, white-collar crimes do not involve physical violence or threats. Instead, they rely on deception and manipulation.
Complexity: White-collar crimes often involve intricate schemes that can be difficult to detect and prosecute. They typically require specialized knowledge in areas such as finance, accounting or law.
High Financial Impact: The financial impact of white-collar crimes can be enormous, affecting not only individuals but also entire economies. For instance, corporate frauds can lead to the collapse of companies, loss of jobs and a decrease in investor confidence.
Perpetrators from Higher Socio-Economic Classes: White-collar crimes are usually committed by individuals in positions of power or trust, such as executives, politicians or professionals like doctors and lawyers.
What are Traditional Crimes and Blue-Collar Crimes?
Traditional crimes, often referred to as blue-collar crimes, are crimes that are more easily recognizable and involve physical acts of violence or property destruction. These crimes are typically associated with individuals from lower socio-economic backgrounds, although this is not always the case.
Examples of Traditional Crime in India
Theft and Burglary: Theft, burglary and robbery are among the most common traditional crimes in India. These crimes often involve the use of force or the threat of force to steal property or money from individuals or businesses.
Assault and Battery: Physical assault and battery are violent crimes that result in physical harm to the victim. These crimes can range from minor altercations to serious offences involving severe injury or death.
Murder and Homicide: Murder and homicide are the most severe forms of traditional crime, involving the intentional taking of another person’s life. India witnesses a significant number of such cases every year, often driven by personal disputes, revenge or other motives.
Sexual Offences: Crimes such as rape and sexual assault are prevalent in India, with a significant number of cases reported annually. These crimes are violent in nature and cause severe trauma to the victims.
Characteristics of Blue-Collar Crimes
Violent: Traditional crimes often involve physical violence or the threat of violence. The use of force is a common characteristic of these crimes.
Easier to Detect: Unlike white-collar crimes, traditional crimes are usually more straightforward and easier to detect and prosecute. The evidence, such as physical injuries, stolen property or eyewitness testimony, is often more tangible.
Perpetrators from Lower Socio-Economic Classes: Traditional crimes are more commonly associated with individuals from lower socio-economic backgrounds. However, this is a generalization and individuals from any socio-economic class can commit such crimes.
Immediate Impact: The impact of traditional crimes is often immediate and localized, affecting the direct victims and their families.
| White Collar Crimes | Blue Collar Crimes | |
| Nature of Crime | White Collar Crime: Non-violent, involves deceit, fraud or embezzlement | Blue Collar Crime: Violent or involves physical acts like theft or property damage |
| Perpetrators | White Collar Crime: Typically, individuals from higher socio-economic classes, often in positions of power or trust | Blue Collar Crime: Commonly associated with individuals from lower socio-economic backgrounds (though not exclusively) |
| Method of Execution | White Collar Crime: Involves complex schemes requiring specialized knowledge in areas like finance, law or technology | Blue Collar Crime: More straightforward, involves physical acts like assault, theft or property damage |
| Impact on Society | White Collar Crime: Broader and more profound economic impact; affects economies, companies and investors | Blue Collar Crime: Immediate and localized impact; directly affects victims and their families |
| Detection and Prosecution | White Collar Crime: Difficult to detect and prosecute due to complexity; lack of physical evidence; extensive investigations required | Blue Collar Crime: Easier to detect and prosecute; involves tangible evidence like physical injuries, stolen property or eyewitness testimony |
| Legal Framework | White Collar Crime: Addressed under specialized legislation such as the Prevention of Corruption Act, Companies Act or Prevention of Money Laundering Act | Blue Collar Crime: Theft, burglary, assault, battery, murder and sexual offences |
| Examples in India | White Collar Crime: Corporate fraud, tax evasion, money laundering, bribery and corruption | Blue Collar Crime: Theft, burglary, assault, battery, murder and sexual offenses |
| Public Awareness | White Collar Crime: Generally lower awareness; crimes are often unnoticed by the general public | Blue Collar Crime: Higher awareness due to visibility and immediate impact of crimes |
| Investigation Challenges | White Collar Crime: Requires specialized knowledge; involves intricate, often international, financial transactions | Blue Collar Crime: More straightforward, with evidence often available at the crime scene |
| Penalties | White Collar Crime: Penalties may include fines, imprisonment and disqualification from holding certain positions | Blue Collar Crime: Penalties often involve imprisonment, fines, or, in severe cases, capital punishment |
Difficulties in Enforcing Anti-White Collar Crime Legislation
Enforcing anti-white collar crime legislation can be challenging due to several factors. Here are 10 points highlighting the difficulties:
Complexity of Crimes: White collar crimes often involve intricate schemes and sophisticated techniques, making them difficult to detect and prove. The complexity of these crimes requires specialized knowledge and resources.
Lack of Awareness: Many people are unaware of what constitutes white collar crimes, making it challenging to identify and report such offenses. This lack of awareness hampers enforcement efforts.
Limited Resources: Law enforcement agencies may have limited resources allocated to investigating white collar crimes. These crimes often require extensive financial and technical expertise, which may not be readily available.
Cross-Border Nature: White collar crimes frequently involve international transactions and networks, making enforcement challenging. Cooperation between different jurisdictions is necessary, but it can be hindered by legal and logistical barriers.
Time-consuming Investigations: White collar crime investigations can be lengthy and time-consuming. Gathering evidence, analyzing financial records, and interviewing witnesses can take months or even years, delaying the enforcement process.
Lack of Whistleblower Protection: Whistleblowers play a crucial role in exposing white collar crimes. However, the lack of adequate protection for whistleblowers discourages individuals from coming forward, impeding enforcement efforts.
Influence and Power: Perpetrators of white-collar crimes often hold positions of power and influence, which can hinder investigations and prosecutions. They may have the resources to hire skilled lawyers and use their connections to evade justice.
Technological Advancements: Rapid advancements in technology have given rise to new forms of white-collar crimes, such as cyber fraud and identity theft. Law enforcement agencies must continually adapt to these evolving techniques, which can be challenging.
Legal Complexity: White collar crimes often involve intricate legal and financial structures, making it difficult to establish criminal liability. Prosecutors must navigate complex legal frameworks and prove intent, which can be challenging in these cases.
Public Perception: White collar crimes are sometimes seen as less serious compared to other offenses, leading to a lack of public support and pressure for enforcement. This perception can undermine efforts to prioritize and allocate resources for combating white collar crimes.
Inadequate Legal Framework: While India has laws in place to address white-collar crimes, the legal framework is often seen as inadequate in terms of enforcement. The slow pace of the judicial process and the influence of powerful individuals involved in such crimes can hinder justice.
Corruption: Corruption within law enforcement and the judicial system can also pose a significant challenge in addressing white-collar crime in India. This can lead to delays in investigations, manipulation of evidence or even the outright dismissal of cases.
In conclusion, enforcing anti-white collar crime legislation faces numerous challenges, including the complexity of crimes, limited resources, cross-border nature, time-consuming investigations, lack of whistleblower protection, influence and power of perpetrators, technological advancements, legal complexity, and public perception. Overcoming these difficulties requires a multi-faceted approach involving collaboration between law enforcement agencies, legislative reforms, public awareness campaigns, and international cooperation.
