Fraud and making off without payment

Distinguishing the areas of fraud in the specification

Lesson Objectives

• I will be able to outline the law relating to fraud

• I will be able to distinguish between fraud by false representation and obtaining services disonestly

• The Fraud Act 2006 came into being as a direct result of the need to overcome problems with the old law and to simplify the law

• The Fraud Act 2006 creates a general offence of fraud with different ways of committing it

• The AQA Law specification includes fraud by false representation and obtaining services dishonestly only

• Making off without payment continues under the Theft Act 1978 and is retained from the previous AQA specification

Fraud by false representation(s2 Fraud Act 2006)

• Makes a false representation• Dishonestly• Knowing that the representation was or might

be untrue or misleading• With intent to make a gain for himself or

another, to cause loss to another or to expose another to risk of loss

Obtaining services dishonestly(s11 Fraud Act 2006)

• Obtains for himself or another• Services• Dishonestly• Knowing the services are made available on the

basis that payment has been, is being or will be made for, or in respect of, them or that they might be and

• Avoids or intends to avoid payment in full or in part

Making off without payment(s3 Theft Act 1978)

• Makes off• Without having paid as required or expected• Knowing payment on the spot is required• Dishonestly• Intent to avoid payment

• Where statutory interpretation is needed, as much of the law is new, the courts will use cases decided under the previous law to help interpret the Fraud Act 2006

• These 3 offences have some overlapping concepts, the most obvious of which is dishonesty. There are circumstances where the offences will overlap

• In such cases, the CPS will choose the most appropriate offence. In the exam, you should discuss all offences that might be relevant and decide whether or not the elements of each relevant offence are fulfilled

Fraud by false representation:

Fraud Act 2006, s2

Lesson objectives

• I will be able to state the definition of fraud by false representation

• I will be able to explain the actus reus and mens rea of fraud by false representation

• I will be able to explain cases that illustrate the law on fraud by false representation

• This offence is part of a suite of three offences that come under the general offence of fraud found in s1 of the Fraud Act 2006

• The others are failure to disclose information when there is a legal duty to do so (s3) and abuse of position (s4) – we only need to consider s2

• Notes from the book

The Act

• 2 Fraud by false representation• 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)

There are 4 elements to consider:

•1. make a false representation•2. dishonestly•3. knowing that the representation was or might be untrue or misleading•4. with intent to make a gain for himself or another, to cause loss to another or to expose another to risk of loss

1. Make a false representation (actus reus)

• Fraud is a conduct crime, this means that no particular end result has to be proved

• Therefore, no one has to believe the false representation that has been made – just making the false representation is enough

• It is complete as soon as the defendant makes the representation provided that it is made with the necessary dishonest intent (mens rea)

• The Act, in s2(2) makes it clear that false means untrue or misleading, but the word ‘representation’ is not defined

• The Act does, however, explain what the representation must be about and how it may arise – a factual statement made by one party in order to induce another party to do something

• Section 2(3) helps by stating that a ‘representation’ means any representation as to fact or law. This means that the argument as to whether something is a statement of fact or law is irrelevant; both suffice for fraud

• A statement of fact is straightforward. A statement of law may be a statement about the effect of a legal document such as a loan agreement that is in fact a mortgage and not an unsecured loan

• A difficulty arises where the representation is a statement of opinion. If the statement is not the genuine opinion of the person making it, it can amount to fraud, but often the victim will prefer to take civil action to recover his money, only resorting to criminal law when there is little prospect of succeeding

• Where the representation was true when made, but later becomes false, the offence can be committed by not telling of the change

• DPP v Ray (1974)• Rai (2000)

• The representation as to the state of mind of a person can also be sufficient for criminal liability – asking for money to buy a book when you want to go to the pub, or asking money for a book for your brother when you want to go to the pub – s2(3)

• Under s2(4), a representation may be express or implied. It can be expressly made in many ways; the Act puts no limit on this e.g. written or spoken

• A representation can be implied by conduct e.g. uses a credit card, or purports to make a payment from a bank account

• MPC v Charles (1976)• Lambie (1982)

• A representation can be made through a gesture such as a nod of the head or by presence in a restricted area which implies the right to be there e.g. wearing a security badge that implies a certain status. A representation can also be about a person’s identity and will be relevant for identity fraud

• All these become possible because of the meaning of false being untrue or misleading

• This is all confirmed in the explanatory notes to the Act: 15 and 16 in book

• S2(5) makes it clear that the offence can be committed by making a representation to a machine such as an ATM

2. Dishonestly (first part of the mens rea)

• This is the crucial element of the offence. Throughout the passage of the Fraud Act 2006, it has been considered that the Ghosh test applies:

• 1) Would the defendant’s behaviour be regarded as dishonest by the standards of reasonable and honest people?

• (If no, not guilty, if yes the second question is)

• 2) Was the defendant aware that his conduct would be regarded as dishonest by reasonable and honest people?

• It can be seen that the first part of the test is objective and the second part of the test is subjective. If both parts are satisfied, the defendant fulfils the criteria for being dishonest

• It should be noted that the examples of things that are not dishonest in s2 of the Theft Act 1968 do not apply to fraud offences

3. Knowing that the representation was or might be untrue or misleading (second part of the mens rea)

• A representation is defined as ‘false’ if it is untrue or misleading. The person making the false representation must know that it is, or might be, untrue or misleading, but makes a decision to make it anyway

• The words ‘might be’ do not mean recklessness. Actual knowledge that the representation might be untrue is required rather than an awareness of a risk that it might be untrue

• The first point is that the statement must, in fact, be untrue or misleading. The defendant cannot be convicted if the statement is, in fact, true

• If it is the case that the statement is untrue or misleading, then the defendant must know that is the case

• The CPS make the point in their commentary on the Fraud Act 2006 that the same type of evidence as was used to prove the nature of the deception in cases of obtaining by deception will be sufficient for fraud by false representation

4. With intent to make a gain for himself or another, to cause loss to another or to expose another to risk of

loss (third part of the mens rea)

• This part of the mens rea has the key words ‘with intent to’. This means that there is no need for anyone to have suffered any actual loss or be exposed to any loss or even that the defendant makes a gain

• This is all about what the defendant intends by carrying out his act – it is very similar to blackmail

• Parkes (1973)

Exam Qs