When did fraud law change?
The law that governs fraudulent acts changed with the introduction of the Fraud Act 2006 which came into force the following year. This piece of legislation came about with the law commission becoming increasingly concerned with the number of cases under the old regime leading to the collapse of prosecutions, acquittals and successful appeals against convictions.
The new legislation fails to define exactly what “fraud” means, however under Sections 2,3,4 and 11 it goes some way to highlight the provisions that will govern the offences. In the article we discuss one of the most common offences, Fraud by False Representation, contrary to section 2.
As with much legislation, section 2 is quite wordy but in layman terms it confirms that to be guilty of fraud by false representation the defendant must have dishonestly made a false representation to make a gain for himself or another, or a loss to another. A representation is defined as “false” if it is misleading or untrue and the person making it is aware that it misleading or untrue. A “representation” is not specifically defined other than to say it is any fact or law. The nearest synonym would be a “statement” either said or in writing, or in fact implied.
What is a fraud by false representation?
By way of example; “The payment has been made today”, “the car is in perfect working order” or “my mum gave me permission to sell it”. Those are all verbal representations of specific facts, but the representation can also include a representation as to the state of mind either of the person making the representation or of any other person, “I think the watch is three years old” or “I intend to make payment when I get paid”. Representations can also be made by conduct for example by showing somebody else’s ID card to gain access to a private club, or by changing the odometer reading on a car prior to selling it. Examples of representations relating to “law” are things such as “you’re not entitled to a refund on faulty goods”.
Representations can also be implied, probably the most simple example is when, knowing that your membership has expired you continue to visit the gym and nod to the receptionist on arrival, effectively implying that you are still a paying member.
A “gain to another” would include situations where a false reference is supplied to assist “another” to “gain” employment.
Do I have to be dishonest to commit fraud by false representation?
The main element to the Section 2 Offence falls within the mental element of all Fraudulent Crimes and that is the Dishonesty Element. The leading case on this is Ghosh  3 WLR 110 referred to by lawyers as the Ghosh test. The test contains two elements:
Objective – according to the standards or reasonable and honest people, do the jury believe that what was done was dishonest. If they do not then the prosecution fails. If they do they go on to consider the second element.
Subjective – here the jury must consider whether the defendant must have realised that they were acting dishonestly. It goes without say that where the jury consider themselves that the action was dishonest, in most cases it will be obvious that the defendant must have known that they were acting dishonestly. Even in “Robin Hood” type cases, although a defendant may feel that he is morally justified in carrying out the act, they are still acting dishonestly because they know that ordinary people would consider the actions to be dishonest
Why did fraud law change
So, what brought about this change in legislation and what has it done for the new offences of Fraud?
Well, the legislation was brought about to counteract the many criticisms and holes in the old legislation which led to collapses of a number of cases.
Has the fraud act 2006 worked?
The Fraud Act repeals all of the former deception offences under the Theft Acts of 1968 and 1978 and replaces them with a single offence of Fraud which goes back to the Pre 1968 idea that it is not what the result of the conduct or what the effect of the conduct was on any victim, but rather the intention of the perpetrator and what he or she actually did. This seems to brush away the difficulties and gaps in the old legislation but in a manner which deliberately does not specify a particular activity. In answer to the question has it worked, we would say “yes, we think it has”. The Court of Appeal has been largely untroubled by the Act and although we are aware of cases of Fraud collapsing, these have been as a result of poor prosecution or investigation rather than technicalities or loopholes in the law.
There are many different areas of business where fraud offences take place, see the link for a full list of areas of law, types of frauds and how we can assist.