Fraud and the Fraud Act 2006

Fraud is the modern law’s general offence of dishonest economic wrongdoing. It is conceptually adjacent to theft, covered in Week 8, but it is not theft by another name. Theft under the Theft Act 1968 is built around appropriation of property belonging to another with intention permanently to deprive. Fraud under the Fraud Act 2006 is built around dishonest conduct intended to produce gain, loss, or risk of loss. No gain need be made; no loss need occur; no property need pass; no victim need actually be deceived. The offence is therefore inchoate in its practical reach while remaining a substantive offence in form.

For Durham purposes, the topic requires close control of statutory language. Fraud is not a common law offence. Section 1 identifies three ways of committing the single offence: false representation under s 2; failure to disclose information under s 3; and abuse of position under s 4. Section 5 defines gain and loss. The recurring mens rea is dishonesty plus an intention, by the relevant conduct, to make a gain for oneself or another, or to cause loss to another or expose another to a risk of loss. The offence is triable either way, but its maximum sentence of ten years reflects its breadth and seriousness.

The Fraud Act 2006 replaced the older deception offences in the Theft Acts. That reform matters doctrinally. The older law often required proof that a deception operated on a human mind and caused the obtaining of property, services, or other advantage. Those requirements created artificial disputes, especially in computerised transactions. The 2006 Act deliberately avoids those constraints. A representation may be made to a machine; it may be implied; it may concern law or fact, including a person’s state of mind. The statute is designed for contemporary commerce, digital systems, credit arrangements, benefits claims, banking, employment, insurance, and fiduciary or quasi-fiduciary relationships.

The central intellectual problem is dishonesty. Students should carry forward the Week 2 work on mens rea and the Week 8 work on theft. Dishonesty is not simply intention to gain, nor awareness of loss. It is a normative fault element: the defendant’s conduct is assessed against the standards of ordinary decent people, after the tribunal of fact has established what the defendant actually knew or believed about the relevant facts. The old Ghosh requirement that the defendant must realise that ordinary decent people would regard the conduct as dishonest has been displaced by Ivey and confirmed in criminal law by Barton.

In an examination, fraud answers often fail by collapsing the three routes into a single moral accusation. That is unsafe. The first task is always classification: what is the conduct alleged? Is it a representation, a non-disclosure under legal duty, or abuse of a position of financial trust? Only then should one apply falsity, legal duty, position, abuse, dishonesty, and intention to gain or cause loss. In Durham’s compulsory first-year structure, you have already learned statutory interpretation, public law legality, and legal method. Use those skills here. Fraud is an exercise in disciplined statutory construction, not rhetorical condemnation.

The pre-2006 law of fraud was fragmented. English criminal law traditionally dealt with dishonest acquisition through a mixture of common law offences, larceny, false pretences, and later statutory deception offences. The Theft Act 1968 modernised larceny into theft and introduced offences such as obtaining property by deception. The Theft Act 1978 added further deception offences, including obtaining services by deception and making off without payment. Yet the structure remained piecemeal. Liability depended on identifying the correct offence, the thing obtained, the kind of deception, and the causal route between deception and transfer.

That older model reflected a transaction-centred conception of fraud. The paradigm was a person lying to another person and thereby inducing that person to part with property or confer a benefit. This worked tolerably well for face-to-face fraud. It worked poorly for credit cards, automated payment systems, electronic banking, online transactions, benefits administration, and corporate fraud. Courts stretched concepts such as implied representation and continuing representation to meet new situations. Cases such as DPP v Ray and Lambie showed the courts willing to treat conduct as maintaining a representation even after circumstances had changed. That development was intelligible, but it made the law technically elaborate and sometimes unprincipled.

The Law Commission’s work preceding the Fraud Act 2006 identified three principal defects. First, the older law was too complex: prosecutors had to select between overlapping offences. Secondly, it was too narrow in some important respects: deception of machines and failures to disclose information sat uneasily within offences designed around deceived human minds. Thirdly, it sometimes overemphasised completed obtaining rather than culpable dishonest risk-creation. The Commission recommended a general offence of fraud committed by different modes. Parliament substantially accepted that approach.

The 2006 Act therefore represents both simplification and expansion. It simplified the label: fraud is now a single offence under s 1. It expanded the point of criminalisation: the offence is complete once the defendant dishonestly does one of the proscribed acts with the relevant intent. It is not necessary to prove that the intended gain or loss materialised. This is the most important historical movement: from deception-caused transfer to dishonest conduct intended to prejudice property interests.

The change also reduced the importance of causation. In theft, causation is rarely central because appropriation is the defendant’s assumption of rights. In the old deception offences, causation was central because the prosecution had to show that deception induced the obtaining. Under the Fraud Act, causation is largely displaced. A false representation need not deceive anyone. A failure to disclose need not cause payment. Abuse of position need not actually produce loss. Intention is the anchor.

The reform did not abolish all older cases. Pre-2006 cases remain valuable where they illuminate concepts retained or replicated in the new law: implied representation, continuing representation, legal duty to disclose, and dishonesty. But they must be used with care. A Durham answer should not cite pre-2006 authority as if the old offences still govern. Use them for analogical reasoning, not as substitutes for the statutory elements.

The other historical turning point is dishonesty. For decades criminal courts applied the two-limb test in R v Ghosh: was the conduct dishonest by the ordinary standards of reasonable and honest people; and did the defendant realise that it was dishonest by those standards? That second limb was criticised for allowing defendants with distorted moral standards to escape liability. Ivey v Genting Casinos reformulated the test by eliminating the need for appreciation of dishonesty. Barton confirmed that Ivey is binding in criminal cases. Thus fraud doctrine now combines a broad statutory actus reus with a more objective evaluative dishonesty standard.

Begin with the architecture. Section 1 does not itself describe the conduct. It says that a person is guilty of fraud if in breach of one of ss 2, 3, or 4. Each mode has its own conduct element, but all three share the same core mental elements: dishonesty and intention to make gain or cause loss or risk of loss. The prosecution need not prove actual gain, actual loss, actual reliance, or actual deception. That is the first principle.

Under s 2, the conduct is making a false representation. A representation may be express or implied. Express representations are straightforward: a false income figure on a mortgage application; a false identity in an online sale; a false statement that goods exist and will be delivered. Implied representations are more subtle. By presenting a debit card for payment, one may imply authority to use it. By submitting an invoice, one may imply that the work was done or that the sum is due. By ordering food in a restaurant, one may imply present intention to pay. Section 2(5) deliberately includes representations made to systems or devices, such as payment terminals, websites, benefit portals, or automated banking platforms.

Falsity under s 2 has two components. The representation must be untrue or misleading, and the maker must know that it is, or might be, untrue or misleading. This is not negligence. A person who innocently makes a false statement without awareness of its possible falsity does not satisfy s 2(2)(b), though dishonesty would also usually be absent. A representation may concern fact or law, including a state of mind. A false statement of intention can therefore be fraud: for example, promising to repay a loan while knowing that one has no intention of doing so. The difficulty is evidential, not conceptual.

The leading modern authorities concern dishonesty, implied representation, continuing deception, and abuse of position. Although some pre-date the Fraud Act, they remain important because the Act preserved or codified several concepts developed under the deception offences.

R v Barnard is an early illustration of implied representation by conduct. Wearing academic dress to obtain goods on credit communicated, without express words, a false status. Its modern significance is not the old procedural setting but the recognition that conduct can carry representational meaning. Section 2(4) now states this expressly.

DPP v Ray shows that a representation may continue. The defendants ordered and consumed a meal intending to pay, but later decided to leave without payment. The House of Lords treated remaining in the restaurant after the change of mind as maintaining the representation that payment would be made. The case remains useful when analysing changes of intention during a transaction. Under the Fraud Act, the same facts may be approached through implied false representation or making off without payment, depending on timing and charge.

R v Lambie concerned credit card use after the card issuer had withdrawn authority. The House of Lords treated use of the card as a representation of authority or entitlement in the credit transaction. It is now easier to analyse such cases under s 2 because a representation may be made to a system or device and need not deceive a human mind in the old technical sense.

R v Rai illustrates the significance of failing to correct a representation after circumstances have changed. A local authority paid for works after the defendant had already received payment from the householder. His failure to inform the authority was treated as deception in the older law. Under the 2006 Act, similar facts invite analysis under s 2 as a continuing implied representation, under s 3 if a legal duty to disclose can be identified, and possibly under s 4 if the defendant occupied a position involving protection of another’s financial interests.

Ivey v Genting Casinos is the decisive modern authority on dishonesty. Though a civil gambling case, the Supreme Court stated the correct test for dishonesty generally. It rejects the second limb of Ghosh. The tribunal determines the defendant’s actual belief as to facts, then applies objective standards of ordinary decent people. This prevents personal moral exceptionalism from defeating liability.

R v Barton and Booth confirmed that Ivey is the test in criminal proceedings. This is now settled for examination purposes. A defendant need not appreciate that ordinary decent people would call the conduct dishonest. However, genuine factual beliefs still matter at the first stage. That distinction is often the difference between strong and weak answers.

R v Valujevs is important for s 4. The Court of Appeal treated abuse of position broadly enough to cover exploitation of vulnerable workers in a gangmaster context. The position need not be a technical fiduciary office. The statutory language is functional: was the defendant expected to safeguard, or not act against, the financial interests of another? The answer depends on the substance of the relationship, not its label.

See practice questions section below.

See further reading section below.