Statistics:
In 2016 there were estimated losses totalled at £768.8m from fraud. This increased to £844.8m in 2018.
Internet dating scams accounted for 74% of fraud reports (in Australia).
Of the 115,991 fraud crimes that were reported, only 2% achieved an outcome.
Adults aged 45-54 are most likely to be a victim of fraud.
Individuals in managerial and professional roles are more likely to be victims of fraud.
Old Offences:
Obtaining Property by Deception
Obtaining a Money Transfer by Deception
Obtaining Pecuniary Advantage by Deception
Obtaining Services by Deception
Evading a Liability by Deception
These old offences required harmful wrongdoing and dishonesty, which caused problems during prosecution as the causal link between the deception and obtaining had to be proven.
In Hensler, D sent V a begging letter claiming poverty when they were, in fact, not. V saw through D’s deception but sent the money regardless. D held to be not guilty as he did not obtain the money by false pretences.
Sentencing:
Max Sentence: 10 years.
Fraud Act 2006:
Fraud fundamentally works on the concept of dishonesty.
Individuals and companies can guard against prosecution for fraud by disclosing the risk involved to the other party when they make potentially misleading statements. This is especially important in high-risk and volatile areas, such as investments and banking.
Fraud by False Representation:
s2(1) – D will be Guilty of Fraud by False Representation if:
s2(1)(a) – Dishonestly makes a false representation and
s2(2) – Representation is false if -
s2(2)(a) – untrue or misleading, and
s2(2)(b) – the person making it knows that it is, or might be.
s2(4) - A representation may be express or implied.
s2(1)(b) – intends, by making the representation –
s2(1)(b)(i) – to make a gain for himself or another, or
s2(1)(b)(ii) – to cause loss to another or to expose another to a risk of loss.
Note the lack of definition for ‘dishonesty’, unlike in the Theft Act 1968.
In Ivey v Genting, the Ghosh test was doubted for its subjective element. I was a professional gambler and had established a system where he could recognise cards. I won £7.7m, but G refused to pay. G stated that I was ‘cheating’ under the Gambling Act 2005.
The Supreme Court removed the subjective element in the Ghosh test for dishonesty; dishonesty is satisfied when an ordinary, reasonable person would consider an act or omission dishonest. Note: this new test has never actually been applied to a fraud case.
In Augunas, it was established that D must know that their false representation is untrue or misleading; the standards of a reasonable person are not enough. However, D would be guilty if they ignored obvious doubts about the representation they were making, as this shows D’s knowledge of the false representation.
Fraud by Failing to Disclose Information:
s3(1) – D will be Guilty of Fraud by Failing to Disclose Information if:
s3(1)(a) – Dishonestly fails to disclose to another person information which they are under a legal duty to disclose, and
s3(1)(b) – intends, by failing to disclose –
s3(1)(b)(i) – to make a gain for himself or another, or
s3(1)(b)(ii) – to cause loss to another or to expose another to a risk of loss.
Fraud by failing to disclose information is tied to the existence of a legal duty.
In UAE v Allen, A provided a post-dated cheque to a creditor for the purposes of repaying a loan. A was not held to be under an obligation to tell a creditor that there were no longer sufficient funds in the account to repay a loan.
In White, W did not disclose that they were unemployed while applying for a mortgage. W was not convicted. However, if there was an implied assertion, orally or in the mortgage application, that they were employed, s2 would be breached.
Example Duties:
Fraud by Abuse of Position:
s4(1) – D will be Guilty of Fraud by Abuse of Position if:
s4(1)(a) – D occupies a position where they are expected to safeguard, or not act against, the financial interests of another person, and
s4(1)(b) – Dishonestly abuses that position, and
s4(2) – An abuse of position can be either an act or omission.
s4(1)(c) – intends, by abusing their position –
s4(1)(c)(i) – to make a gain for himself or another, or
s4(1)(c)(ii) – to cause loss to another or to expose another to a risk of loss.
In Marshall, M (a care home worker) misused resident’s bank accounts and was convicted under s4.
Fraud by abuse of position is not tied to the existence of a legal duty and is usually used to prosecute in cases of bribery.
Conspiracy to Defraud:
This offence is committed when 2 or more people agree to use fraudulent or dishonest means to injure or prejudice the legitimate interests of another. [3]
Reform:
There is no offence of ‘failing to prevent fraud’. The Serious Fraud Office have called for the creation of such an offence, by analogy to the offence of ‘failing to prevent bribery’. [4]
Resources:
References:
[1] R v Daley [2010] EWCA Crim 2193 [2] R v Razoq [2012] EWCA Crim 674 [3] Scott v Metropolitan Police Commissioner [1975] AC 819; Norris V Government of the United States [2008] UKHL 16 [4] Bribery Act 2010 s7
Cases Mentioned:
R v Hensler (1870) 11 Cox 570
Ivey v Genting Casinos [2017] 3 WLR 1212
R v Augunas [2013] EWCA Crim 2046
UEA v Allen [2012] EWHC 1712 (admin)
R v White [2014] EWCA Crim 714
R v Marshall [2009] EWCA Crim 2076
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