Fraud is the deliberate use of deceit or dishonesty to cause loss or disadvantage to another person or party. In England and Wales, fraudulent offences are governed by the Fraud Act 2006. The legislation makes it easier for authorities such as the Crown Prosecution Service (CPS) and the Serious Fraud Office to pursue legal action against those suspected of fraud.
There are three main offences under the Fraud Act 2006:
- Fraud by false representation
- Fraud by failing to disclose information
- Abuse of position
Someone is guilty of fraud by false representation if he dishonestly makes a false representation with the intention of making a gain for himself or causing loss to another. A representation is considered false if it is misleading or untrue, and the person making it knows (or suspects it might be) misleading or untrue. An example of fraud by false representation would be knowingly exaggerating your income on a mortgage application.
Fraud by failing to disclose information is slightly different. To be in breach of this offence, someone must dishonestly fail to disclose information which he is under a legal duty to disclose, with the intention of making a gain for himself or a loss to another. An example would be making an insurance claim for an item that has been lost or stolen, when in fact you remain in possession of that item.
Abuse of position is when someone occupies a position in which he is expected to safeguard the financial interests of another person, but dishonestly abuses that position to make again for himself or cause a loss to another. An example would be an employee who in charge of the company’s accounts. If this person engineers the system to make payments into their own personal bank account, this would amount to an abuse of position.
The legislation also makes it illegal to make, supply or be in possession of any articles used for fraudulent activity. This might include fake credit cards or card-reading technology. Furthermore, you cannot participate in a fraudulent business carried on by a sole trader or company, or obtain services dishonestly.
What are the penalties for fraud?
The penalties for fraud depend on whether you are charged with a summary offence or an indictable offence. Summary offences are more minor charges and involve very small-scale fraud. However, the authorities do not take fraud offences lightly and cases typically proceed to the Crown Court.
The maximum penalty for fraud when found guilty:
- On a summary conviction –is 12 months in prison, a fine, or both
- On conviction on indictment –is 10 years in prison, a fine, or both
A fraud conviction will not necessarily lead to the maximum penalty. The judge will consider various factors when deciding a sentence. This includes the accused’s involvement in the fraudulent activity, the extent of the deceit and the monetary value of the gain/loss.
It can also be possible to reduce a sentence by pleading guilty. There is a sliding scale whereby the earlier you plead guilty, the greater the sentence reduction will be. Those who plead guilty at the Magistrates’ Court may see their sentence cut by up to a third. However, this strategy is only suitable in certain cases. Find out more in our Fraud Solicitors article.
