Fraud and the Fraud Act 2006
A systematic analysis of false representation, failure to disclose, and abuse of position under the Fraud Act 2006, with critical assessment of dishonesty, gain and loss, and the mental element
§01 Overview
The Fraud Act 2006 marks a watershed in the law of dishonesty offences, replacing the sprawling and piecemeal deception offences under the Theft Acts 1968 and 1978 with a single, tripartite offence of fraud. Enacted following the Law Commission's Report No 276 Fraud (2002), the Act addresses the failure of the old law to keep pace with modern methods of dishonest conduct, particularly in the digital economy.
Under the 2006 Act, fraud is committed in one of three ways: by false representation (s 2), by failure to disclose information (s 3), or by abuse of position (s 4). Each route constitutes the actus reus of the single offence contrary to s 1. The mens rea is uniform: dishonesty (now governed by the test in Ivey v Genting Casinos (UK) Ltd t/a Crockfords [2017] UKSC 67), coupled with intention either to make a gain or to cause loss or risk of loss. Critically, fraud is a conduct crime rather than a result crime: no actual gain or loss need materialise, and no person need be deceived. This represents a radical departure from the pre-2006 law of deception and aligns fraud with inchoate liability, criminalising the dishonest act itself.
This note traces the structure of the offence, examines the case law on dishonesty (particularly the shift from Ghosh [1982] QB 1053 to Ivey), analyses each of the three forms of fraud, and engages with academic criticism concerning over-criminalisation, fair labelling, and the blurring of conduct and result elements. It is essential to read this note alongside your earlier work on theft (Week 8): the two offences share the dishonesty requirement but diverge sharply in structure and scope.
§02 Historical Context: From Deception to Fraud
Before 2006, dishonest obtaining was criminalised through a series of deception offences created by the Theft Acts 1968 and 1978, notably obtaining property by deception (s 15, TA 1968), obtaining services by deception (s 1, TA 1978), and evasion of liability by deception (s 2, TA 1978). These offences required proof that:
- D made a false representation;
- The representation deceived V;
- The deception caused V to act in a particular way (e.g. transferring property); and
- D acted dishonestly.
This framework proved unwieldy. It required the prosecution to establish a causal chain linking D's deception to V's conduct and to a proscribed result. The proliferation of offences—each tailored to a different kind of result—led to technical complexity and lacunae. The House of Lords in Preddy [1996] AC 815 famously held that a CHAPS transfer of funds did not amount to 'obtaining property belonging to another', since the debt created was a new chose in action not belonging to the bank. Parliament responded with patchwork amendments (s 15A and s 15B, TA 1968), but the underlying structure remained fragile.
The Law Commission's Fraud report (LC 276, 2002) proposed a single, general offence of fraud based on conduct rather than result, removing the need to prove that any person was actually deceived or that any particular consequence followed. This would simplify proof, eliminate gaps, and recognise that the criminality of fraud lies in the dishonest act itself. The Commission also recommended abolishing the Ghosh direction on dishonesty, though—ironically—it took a civil case (Ivey, 2017) to achieve that reform.
The Fraud Act 2006 received Royal Assent on 8 November 2006 and came into force on 15 January 2007. It repealed almost all the Theft Act deception offences and introduced:
- Section 1: fraud (tripartite)
- Sections 6–7: possession of articles for use in fraud; making or supplying articles for use in frauds
- Section 11: obtaining services dishonestly (a residual result-based offence)
The shift from deception to fraud reflects a broader trend towards inchoate-style liability and raises important questions about the proper scope of the criminal law.
§03 Key Principles and Structural Overview
The Tripartite Offence
Section 1(1) Fraud Act 2006 provides:
A person is guilty of fraud if he is in breach of any of the sections listed in subsection (2) (which provide for different ways of committing the offence).
Subsection (2) lists:
- Section 2: fraud by false representation
- Section 3: fraud by failing to disclose information
- Section 4: fraud by abuse of position
Each section specifies a mode of committing fraud. The offence carries a maximum sentence of ten years' imprisonment on indictment (s 1(3)), or twelve months and/or a fine on summary conviction.
Fraud as a Conduct Crime
The essence of fraud under the 2006 Act is the commission of the prohibited conduct with the requisite dishonest intention. Actual deception, gain, or loss is not required. As the Explanatory Notes make clear (para 7):
The offence is entirely offender focused. It is complete as soon as the defendant has done the prohibited act with the specified state of mind.
This represents a fundamental shift. Fraud is committed when D acts dishonestly with intent to gain or cause loss; whether anyone is deceived, whether gain or loss occurs, and whether any victim suffers are irrelevant. The offence is thus akin to attempt: it criminalises dangerous or culpable conduct ex ante, not harmful results ex post.
The Common Mens Rea: Dishonesty and Intention
All three forms of fraud require:
- Dishonesty — the central concept, now governed by Ivey rather than Ghosh.
- Intention to make a gain or cause a loss (or risk of loss) to another.
§04 Statutory Framework: Sections 2, 3, 4, and 5
Section 2: Fraud by False Representation
Section 2 provides:
(1) A person is in breach of this section if he— (a) dishonestly makes a false representation, and (b) intends, by making the representation— (i) to make a gain for himself or another, or (ii) to cause loss to another or to expose another to a risk of loss. (2) A representation is false if— (a) it is untrue or misleading, and (b) the person making it knows that it is, or might be, untrue or misleading. (3) 'Representation' means any representation as to fact or law, including a representation as to the state of mind of— (a) the person making the representation, or (b) any other person. (4) A representation may be express or implied. (5) For the purposes of this section a representation may be regarded as made if it (or anything implying it) is submitted in any form to any system or device designed to receive, convey or respond to communications (with or without human intervention).
Pro members see the full notes including statute extracts, case quotes, worked tutorial essays, and practice questions.
§05 Landmark Cases
Ivey v Genting Casinos (UK) Ltd t/a Crockfords [2017] UKSC 67
Facts: Ivey, a professional gambler, engaged in 'edge-sorting' at a casino—a technique exploiting manufacturing defects in playing cards to gain an advantage. The casino refused to pay his winnings (£7.7 million), claiming his conduct was dishonest. Ivey argued he had not cheated because edge-sorting required skill and the casino had unwittingly facilitated it.
Issue: What is the test for dishonesty in civil and criminal law?
Holding: The Supreme Court (Lord Hughes) held that the correct test is:
- What was D's actual knowledge or belief as to the facts?
- Given that state of mind, was D's conduct dishonest by the objective standards of ordinary decent people?
The second, subjective limb of Ghosh—requiring D to realise his conduct was dishonest—was rejected as a error. Lord Hughes stated:
Pro members see the full notes including statute extracts, case quotes, worked tutorial essays, and practice questions.
§06 Doctrinal Development and Interpretation
The Shift from Result to Conduct Crimes
The 2006 Act represents a decisive shift from result-based deception offences to a conduct-based fraud offence. Under the old law, the prosecution had to prove:
- A false representation;
- Operating on the mind of the victim (deception);
- Causing the victim to act;
- Resulting in a proscribed consequence (obtaining property, services, etc.).
Each element raised evidential and doctrinal difficulties. Causation was especially problematic: if the victim was not in fact deceived (e.g. because he was suspicious but took a risk), no offence was committed (R v Laverty [1970] 3 All ER 432). If the deception was ineffective, liability failed.
The Fraud Act eliminates these requirements. Fraud is committed once D dishonestly engages in one of the three modes of conduct with intent to gain or cause loss. There is no requirement that:
- Any person be deceived;
- Any person act in reliance on D's conduct;
- Any gain or loss occur.
Pro members see the full notes including statute extracts, case quotes, worked tutorial essays, and practice questions.
§07 Academic Debates and Critical Perspectives
Over-Criminalisation and the Inchoate Turn
The most sustained academic criticism of the Fraud Act concerns over-criminalisation. By dispensing with the requirement of deception, causation, and result, the Act criminalises conduct at a very early stage—often before any harm occurs and sometimes before any victim is identified. Critics argue this:
- Blurs the distinction between substantive and inchoate offences. Fraud is formally a substantive offence (s 1) but operates like attempt or conspiracy. This risks diluting the expressive and normative significance of completed crimes.
- Extends the reach of the criminal law into preparatory conduct that would once have been too remote. For example, drafting a fraudulent email and uploading it to a server (s 2(5)) constitutes fraud, even if never opened or read.
- Undermines fair labelling. The label 'fraud' traditionally connoted successful deception and harm; the 2006 Act applies the label to mere dishonest intent.
Pro members see the full notes including statute extracts, case quotes, worked tutorial essays, and practice questions.
§08 Comparative Perspective
Common Law Jurisdictions: Deception or Fraud?
Fraud Act 2006-style reforms are relatively rare in common law jurisdictions. Most retain result-based deception offences or rely on broadly worded fraud statutes.
Australia: Australian states and territories retain deception offences modelled on English law pre-2006. For example, Crimes Act 1900 (NSW) s 192E creates offences of obtaining property, financial advantage, or services by deception. The prosecution must prove deception and obtaining.
Pro members see the full notes including statute extracts, case quotes, worked tutorial essays, and practice questions.
§09 Worked Tutorial Essay
Essay Question: 'The Fraud Act 2006 has transformed fraud from a result crime into a crime of mere dishonest intent. This represents a dangerous expansion of the criminal law.' Discuss.
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Introduction
The Fraud Act 2006 indeed marks a fundamental shift from result-based deception offences to a conduct-based fraud offence. The question invites us to assess whether this is a 'dangerous expansion' of the criminal law. This requires analysis of (i) the nature of the shift, (ii) the arguments for and against conduct-based liability, and (iii) whether appropriate safeguards exist. I argue that while the 2006 Act does expand liability significantly, it is neither unprincipled nor necessarily dangerous, provided the dishonesty and intention requirements are robustly interpreted.
I. The Nature of the Shift
Pro members see the full notes including statute extracts, case quotes, worked tutorial essays, and practice questions.
§10 Common Exam Traps and Practical Points
1. Confusing Fraud with Theft
Trap: Treating fraud and theft as interchangeable.
Reality: They are distinct. Theft requires appropriation of property belonging to another with intent permanently to deprive (s 1 TA 1968). Fraud requires dishonest false representation, failure to disclose, or abuse of position with intent to gain or cause loss. Many fact patterns involve both (e.g. D lies to V to obtain V's money), but the legal elements differ. Always consider both offences and explain why one or both may apply.
Example: D falsely tells V that he needs £500 to pay for his mother's operation. V hands over £500. D has committed:
- Fraud by false representation (s 2): dishonest false representation (lying about the purpose) with intent to gain.
- Theft (s 1): appropriation (accepting the money), belonging to another (it was V's), dishonesty, intention permanently to deprive.
In exams, identify both and discuss which is easier to prove or more appropriate.
2. Forgetting the Intent Requirement
Trap: Assuming dishonesty alone suffices.
Reality: All three forms of fraud require intention to make a gain or cause loss (or risk of loss). If D acts dishonestly but without this intention, there is no fraud.
Pro members see the full notes including statute extracts, case quotes, worked tutorial essays, and practice questions.
§11 Practice Questions
These questions are designed for self-assessment and tutorial discussion. Sketch answers, identify issues, and consult your tutor.
Foundation Questions (suitable for initial revision)
- What are the three ways of committing fraud under the Fraud Act 2006? Explain the actus reus and mens rea of each.
- How does the test for dishonesty in Ivey v Genting Casinos [2017] UKSC 67 differ from the test in R v Ghosh [1982] QB 1053? Why did the Supreme Court reject Ghosh?
Standard Questions (typical exam/tutorial standard)
- Alice orders a meal in a restaurant intending not to pay. She eats the meal and then claims she has no money. Discuss Alice's liability for fraud and/or theft.
- Ben is a solicitor holding client funds in trust. He temporarily transfers £10,000 of client money into his own account to cover a shortfall, intending to repay it within a week. He does repay it. Discuss Ben's liability for fraud and/or theft.
Challenge Question (for top candidates)
- 'The Fraud Act 2006 criminalises dishonest intent, not dishonest harm. This is unprincipled and inconsistent with the harm principle that should govern the criminal law.' Discuss.
§12 Further Reading
Essential
- Law Commission, Fraud, Report No 276 (2002) — the intellectual foundation of the 2006 Act; essential for understanding policy choices.
- Ormerod, David, and Karl Laird, Smith, Hogan, and Ormerod's Criminal Law, 16th edn (Oxford: OUP, 2021), ch 24 — authoritative and detailed treatment of the Fraud Act.
- Ashworth, Andrew, and Jeremy Horder, Principles of Criminal Law, 8th edn (Oxford: OUP, 2016), ch 11 — critical analysis of dishonesty offences, including fraud and theft.
Advanced
- Virgo, Graham, 'Fraud and the Presumption of Innocence' in The Politics of the Criminal Law (Oxford: Hart, 2017) — examines the conduct-crime character of fraud and its implications for proof and presumption.
- Green, Stuart P., Lying, Cheating, and Stealing: A Moral Theory of White Collar Crime (Oxford: OUP, 2006) — normative account of dishonesty offences; defends subjectivist approach to dishonesty.
- Shute, Stephen, 'Appropriation and the Law of Theft' [2002] Crim LR 445 — though focused on theft, discusses overlap with fraud and dishonesty.
- Herring, Jonathan, Criminal Law: Text, Cases, and Materials, 9th edn (Oxford: OUP, 2020), ch 10 — student-friendly with extensive extracts and critical commentary.
Case Notes and Articles
- Beatson and Simester, 'Stealing One's Own Property' (1999) 115 LQR 372 — examines boundaries of theft and fraud.
- Sullivan, GR, 'Fraud and Efficacy in the Criminal Law' in Simester and Sullivan (eds), Harm and Culpability (Oxford: OUP, 1996) — theoretical analysis of fraud and wrongdoing.
- Williams, Glanville, 'Victims and Other Protected Parties in the Criminal Law' [2006] 10 E & P 245 — on the victim-less character of fraud under FA 2006.
Official Materials
- Fraud Act 2006 Explanatory Notes (TSO, 2006) — valuable guide to Parliamentary intent and interpretation.
- Sentencing Council, Fraud, Bribery and Money Laundering Offences Definitive Guideline (2014) — essential for sentencing and proportionality issues.
Comparative
- Dubber, Markus D., and Tatjana Hörnle, Criminal Law: A Comparative Approach (Oxford: OUP, 2014), ch 15 — includes discussion of fraud in German, French, and US law.
Practice questions
Further reading
- Law Commission, Fraud (Law Commission Report No 276)
- David Ormerod and Karl Laird, Smith, Hogan, and Ormerod's Criminal Law
- Andrew Ashworth and Jeremy Horder, Principles of Criminal Law
- Stuart P. Green, Lying, Cheating, and Stealing: A Moral Theory of White Collar Crime
- Jonathan Herring, Criminal Law: Text, Cases, and Materials
- Graham Virgo, Fraud and the Presumption of Innocence
- The Stationery Office, Fraud Act 2006 Explanatory Notes
- Sentencing Council, Fraud, Bribery and Money Laundering Offences Definitive Guideline
- Markus D. Dubber and Tatjana Hörnle, Criminal Law: A Comparative Approach
- James Chalmers and Fiona Leverick, Fair Labelling in Criminal Law