On November 8th the Fraud Act
2006 received Royal Assent and came into force on the 15th
January 2007. The reform of the law relating to fraud follows
the Law Commission's Report on Fraud (Law Com No. 276, Cm
5560, 2002) and the Government’s consultation paper
on Fraud Law Reform (May 2004). The Government's response
to the views expressed in consultations was published on
24th November 2004.
The aim of the legislation is to make the law relating
to fraud clearer and simpler. Both the Law Commission and
the Government considered that the current law is not readily
comprehensible to juries and the existing offences are over-particular,
overlapping and highly technical. It was felt that any attempt
to remedy the defects by the creation of additional specific
offences would be unsuccessful as new ways of committing
fraud are constantly being developed - aided by innovations
in new technology. And so the Law Commission recommended,
and the Government accepted, that a clean sweep was needed.
When in force, the Act will repeal all the offences of deception
created by the Theft Acts 1968–96 and replace them
with one general offence of fraud ( s1 ) and an offence
of obtaining services dishonestly ( s 11). The statute also
creates offences of possession of articles for use in frauds
(s 6 ) and making or supplying articles for use in frauds
(s7)
In this article the offence of fraud will be discussed
and in the next the remaining three offences will be considered.
Fraud
The new offence of fraud may be committed in three ways.
All three forms of the offence require proof of dishonesty
and an intention (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. ‘Gain’ and ‘loss’
are limited to gains or losses in terms of money or other
property.
The three forms of fraud are:
Fraud by false representation (section 2)
A fraudulent representation is an assertion which is untrue
or misleading and which the person making it knows is, or
might be, untrue or misleading. ( s2(2) ).Subsection (4)
provides that a representation may be express or implied.
There are no restrictions or limitations in the way in which
a representation is communicated. It may be written or spoken
and may be transmitted by email or by way of website. And
so the practice of ‘phishing’ – sending
emails purporting to be from a bank with the objective of
eliciting customers’ security details – will
amount to fraud.
A representation may also implied by conduct, for example,
where a person dishonestly misuses a credit card to pay
for items. By offering the card to pay, s/he is falsely
representing that s/he has the authority to use it for the
purchase.
The representation may be one of fact or of law. It may
be as to the current intentions, or other state of mind,
of the defendant; for example, a person who orders a meal
in a restaurant thereby impliedly represents that s/he intends
to pay. If s/he does not intend to pay s/he practises a
false representation (s2(3)).
The offence is complete on the making of the dishonest
representation. There is no need to prove an actual gain
or loss. An intention to gain or cause loss will suffice.
And, unlike the existing law, there is no need to prove
that any person was actually deceived; it will no longer
be necessary to prove that the representation operated on
the mind of the victim. Indeed the representaion need not
be directly communicated to a human mind at all: S2(5) provides
that a representation may be regarded as made if it... is
submitted in any form to any system or devide designed to
receive, convey or respond to communications ( with or without
human intervention)’. Thus entering a PIN number into
a bank cash machine will amount to the making of a representation.
Fraud by failing to disclose information (section
3)
This form of the offence applies where a person dishonestly
fails to disclose to another person information which he
is under a legal duty to disclose. The question whether
a legal duty exists is a matter of the general law. A legal
duty may arise by virtue of a fiduciary relationship between
the parties; and so for example, a solicitor who dishonestly
concealed information from a client in order to gain or
cause loss would be guilty of an offence. A legal duty to
disclose also arises in transactions of ‘utmost good
faith’; and so, if a person dishonestly failed to
disclose that he suffered from a serious medical condition
when applying for life insurance he would be guilty of fraud.
Fraud by abuse of position (section 4)
This applies where the defendant occupies a position where
he would be expected to safeguard another’s or not
to act against another’s financial interests. It is
intended to cover situations where the defendant has been
put in a privileged position and is, for example, given
access to the victim’s premises, equipment, records
or customers. The relationship may arise between employer
and employee, trustee and beneficiary, director and company,
professional person and client, agent and principal, and
between two partners. But the framers of the legislation
did not believe that the section should be limited to those
situations and assumed that it would be a question of fact
in any case whether an appropriate relationship existed
between the parties.
The term ‘abuse’ is not defined but is intended
to include situations where D takes advantage of his position
to make a secret profit.; for example where a manager of
a public house dishonestly sells his own beer on his employers’
premises.
S4(2) provides that the abuse of position may be an omission
as well as a positive act. And so for example, an employee
who dishonestly fails to take up a contract on his employers
behalf, intending to enter into the contract on his own
behalf will be guilty of an offence.
The maximum penalty for an offence of fraud is 10 years’
imprisonment.
[This
article was first published by University of London for
students on the LLB by External Study]
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