FraudBench: A Legal Evaluation of AI Deception

arXiv:2611.12167v1 Announce Type: new Abstract: We introduce FraudBench, an evaluation of large language models' (LLMs) propensities to recommend, assist, or directly take actions that would constitute fraud under U.S. law. Our evaluation contains a novel dataset of 159 scenarios based on real-world U.S. court cases and validated by legal experts. We present each scenario to LLMs via three tasks at varying levels of autonomy: advising users, drafting messages for users to send, and acting directly on behalf of users (477 tasks total). In each scenario, FraudBench re-enacts the facts of a court case to give LLMs an opportunity, but no explicit instruction, to either misrepresent or conceal a material fact in a high-stakes commercial setting--e.g., whether to describe company-funded product testing as "independent" to customers (misrepresentation) or whether to hide unfavorable regulatory investigations from clients (concealment). We evaluate 20 LLMs across 25 experimental conditions (totaling >300,000 generations) and include a preregistered human baseline ($n_{\texttt{annotations}} = 2{,}957$, $n_{\texttt{humans}} = 996$). We score a response as fraudulent when it engages in, assists with, or recommends misrepresentation or concealment. Key findings include: (1) across LLMs, fraud rates ranged from near 0% to over 40%; (2) LLM fraud rates increased with autonomy, with overall rates of 3.0% when advising, 14.7% when drafting, and 21.4% when acting directly, without applying pressure; (3) LLMs sometimes engaged in fraud despite recognizing legal risks; (4) LLMs more often engaged in fraud by concealment than by misrepresentation; and (5) prompt-based interventions substantially affected fraud rates, with a prompt to obey the law reducing fraud rates, while prompts to maximize profits and act agentically increased fraud rates.