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Fraud Law is a Collection of Different Laws and Principles

There is no single law which makes all fraud illegal. What fraud defence solicitors call 'fraud law' is in a collection of different offences and common law (laws which have developed from decisions made by judges in cases). They include offences covered by the Theft Acts of 1968 and 1978 to more recent offences created in the Fraud Act 2006. There are, of course, financial and company offences which do not necessarily fall into the fraud category, but which are often also present in fraud cases.

At first glance, fraud law can seem to be a minefield. This article breaks the law down and sets it out in an understandable way.

Man in a suite writing on a document

The Fraud Act 2006

A major reform in fraud law occurred with the introduction of the Fraud Act 2006.

The 2006 Act includes these offences:

  • Making a false representation (section 2)

  • Dishonestly failing to disclose information (section 3)

  • Abuse of position (section 4)

  • Obtaining services dishonestly (section 11)

Why is conspiracy to defraud still an offence?

A further offence of conspiracy to defraud still exists. It is very broad and is often used as a "catch-all" where the prosecution would have difficulties for technical reasons to get a conviction for one of the new offences, but the prosecution have to show that more than one person was involved. This offence is discussed in greater detail elsewhere on our website.

Fraud Offences under The Theft Acts 1968 and 1978

The Theft Acts 1968 and 1978 created several offences of deception to deal with situations where something was dishonestly obtained by deception. Similarly, the offences applied in situations in which liability was evaded in the same way. These offences can be considered to fall under the umbrella of the law of fraud. This is now considered old law, and can now only be used for allegations which date back before January 15th 2007.

The most common old offences are:

  • obtaining property by deception

  • obtaining a money transfer by deception

  • obtaining a pecuniary advantage by deception

  • obtaining services by deception

What is the defintion of dishonesty in a fraud case?

It is a basic principle of fraud law that the prosecution must prove that the defendant was acting dishonestly when he or she did whatever has been alleged. This issue is often the key issue in many fraud trials. An example might be a situation where a defendant asks a business associate to lend him £20,000, having assured him that his or her minicab business is viable when it was actually on the edge of insolvency. The court would have to be sure that the defendant realised this and that he knew it was dishonest. The test for dishonesty is usually decided by the jury of 12 members of the public - it is a test that must be decided on the facts specific to each case.

In 2017, in a case involving the world-famous poker player Phil Ivey, the Supreme Court reconsidered the law on dishonesty. This led to the first change in the definition for 35 years. This change in position was confirmed in criminal cases in the case of R v Barton & Booth [2020] EWCA Crime 575.

As a result of this change, the test for dishonesty is now only the following:

Were the accused's actions dishonest according to the ordinary standards of reasonable and honest people?

How Does a Fraud Allegation Arise?

Fraud investigations sometimes arise as a result of regulatory investigations or audits by regulatory bodies such as the FCA, although the reality is that allegations more often are the result of a party facing a major loss and reporting it to the authorities. Classic examples of credit card fraud conspiracies, mortgage fraud, or Missing Trader (MTIC) or other VAT frauds all come about because a person or persons (in the latter case HMRC) has lost money rapidly and suspiciously.

Practical Aspects of Fraud Defence

What kind of kind of defence strategy works in a fraud case?

Every case involving fraud or other financial offences is different. A fraud defence solicitor who is a specialist in fraud or financial crime will not have one strategy that fits all. There are certain fundamentals that all clients should be able to expect from their fraud defence solicitors: Appropriate legal and practical business knowledge, an organised and thorough approach to the evidence, and a proactive, aggressive approach to defence are all necessary.

What is the impact of long delays in fraud cases on a defendant?

It is also worth being aware of the fact that most clients of white-collar fraud defence solicitors have never been in trouble with the law before. The unfortunate reality is that investigations and the proceedings which follow in such cases can often take many years to reach their conclusion. The sense of limbo for an individual accused of such offences can be very difficult to live with. It is particularly important that fraud defence solicitors are sensitive to the impact this has on those accused and their families.

What sentence will a person get for fraud?

Sentencing in fraud offences is largely determined by published sentencing guidelines. There are some variations depending on the nature of the specific offence. General principles which are applied to arrive at the length of a sentence are for a Court to consider the overall scale of loss, or potential loss, in combination with a person's role within the fraud. Those who are the driving force behind a particular fraud, and therefore found to have played a "leading role", will face a harsher punishment than those merely following instructions with limited financial gain who are found to have played a "lesser role". Similarly, sentences for a fraud involving, say, £10,000 will be lesser in scale than those relating to a potential loss into the millions.

At the more serious end of the scale, with frauds worth hundreds of thousands of pounds and a leading role, sentences after a trial of 5 years plus are common.

At the lower end of the scale, and perhaps up to amounts of around £100,000, handled correctly by fraud defence solicitors, avoiding prison can be an achievable goal.