Fraud offences - Elements and defences related to fraud

Learning Outcomes

This article explains the three principal ways fraud can be committed under the Fraud Act 2006 and their corresponding actus reus and mens rea, clarifies key definitions (false representation, legal duty to disclose, abuse of position), sets out the Ivey objective test for dishonesty and how it operates, details the breadth of gain and loss and their practical application, and discusses common general defences—absence of dishonesty, claim of right, and duress—together with evidential and legal burdens and the circumstances in which they may arise.

SQE1 Syllabus

For SQE1, you are required to understand the offence of fraud under the Fraud Act 2006, including its elements, scope, and defences, with a focus on the following syllabus points:

• The structure of the Fraud Act 2006 and the three principal ways to commit the offence: by false representation, by failing to disclose information, and by abuse of position.
• The precise actus reus and mens rea requirements for each form of fraud, with close attention to the objective test for dishonesty.
• Application of the Ivey v Genting Casinos [2017] UKSC 67 test for dishonesty in the context of fraud-related offences.
• The breadth of “representation,” “legal duty,” and “position of trust” under ss 2–4 of the Fraud Act 2006, and how these concepts may arise in both professional and non-professional relationships.
• Definitions and legal importance of “gain” and “loss” under s 5 Fraud Act 2006, including their scope as temporary or permanent, and as covering both keeping something one has and acquiring something new, as well as the exposure to a risk of loss.
• The range of general defences available to fraud charges, including how absence of dishonesty and claim of right may be used to negate essential elements of the offence, and the requirements for a defence of duress.
• Associated burden and standard of proof issues in relation to fraud offences and their defences.

Test Your Knowledge

Attempt these questions before reading this article. If you find some difficult or cannot remember the answers, remember to look more closely at that area during your revision.

1. What are the three ways in which fraud can be committed under the Fraud Act 2006?
2. What is the legal test for dishonesty in fraud offences?
3. When does a failure to disclose information amount to fraud?
4. Name two possible defences to a charge of fraud.

Introduction

Fraud is a single offence under the Fraud Act 2006 and may be committed in three principal ways: by false representation, by failing to disclose information, or by abuse of position. Each method targets dishonest conduct intended to produce a gain or cause a loss in respect of money or property. In the context of the current criminal law of England and Wales, it is particularly important to understand that these are conduct crimes: the prosecution is not required to prove actual gain or loss, only the intention to make a gain or cause a loss by the defendant's dishonest conduct.

Key Term: actus reus
The external element of a criminal offence, referring to the conduct, circumstance, or result that comprises the “guilty act.” For fraud, this includes a prohibited act such as making a false statement or failing to disclose required information.

Key Term: mens rea
The mental, or fault, element of a criminal offence—this refers to what the defendant must have been thinking or intending at the time of the conduct. For fraud offences, this typically includes dishonesty and intent to make a gain or cause a loss.

The Fraud Act 2006 was enacted as a response to perceived defects and complexity in the old law of deception and fraud. The Act replaces a patchwork of prior offences (such as obtaining property by deception) with a single, flexible framework focusing on dishonest conduct. Each mode of fraud is now addressed individually, but all share the same core requirement: dishonesty and the requisite intention.

Fraud under the Fraud Act 2006

The Fraud Act 2006 creates a single offence of “fraud” (s 1), which is committed if a person acts dishonestly with intent to make a gain or cause a loss (or to expose another to the risk of loss) by one of the following means:

• fraud by false representation (s 2)
• fraud by failing to disclose information (s 3)
• fraud by abuse of position (s 4)

Each mode is a conduct crime: liability arises on the completion of the relevant act or omission, regardless of whether the intended gain or loss actually materialises. The offences can be committed by acts or omissions, and may be proven even if nobody is deceived or actual harm occurs—what matters is that the act was dishonest and done with the necessary intention.

Fraud by False Representation

A person is guilty of fraud by false representation if they dishonestly make a false representation, intending to make a gain for themselves or another, or to cause loss to another or expose another to a risk of loss (s 2).

Key Term: representation
Section 2(3) of the Act defines "representation" broadly. It includes any representation as to fact or law, including one about the state of mind of any person, and can be made expressly or impliedly, in writing, spoken words, or conduct. A representation can also be made to a machine (e.g. entering information at an ATM or online).

Key Term: false representation
Section 2(2) provides that a representation is false if it is untrue or misleading, and the person making it knows that it is, or might be, untrue or misleading. Knowledge here is subjective, referring to actual awareness or being wilfully blind as to the truth or falsity of the statement.

A false representation can be created by an explicit lie, but also by omission, half-truth, or deliberate failure to correct a known misunderstanding where the circumstances make it clear that a continuing representation is being made (e.g., staying silent when it is known the other party is operating under a false impression).

The prosecution must prove:

• the defendant made a false representation (regardless of whether it was believed)
• the defendant acted dishonestly
• the defendant intended to make a gain or cause a loss (or risk of loss) by making that representation

The definition of "representation" is extremely wide; it can be made to any person or machine, does not need to be received, and need not actually deceive anyone.

Knowledge for the False Representation

The requisite knowledge is subjective: the defendant must personally know or believe the representation is or might be misleading or untrue. It is not enough that a reasonable person would have known (R v Augunas [2013] EWCA Crim 2046).

Scope of Conduct

Examples include overstating qualifications in job applications, falsifying sales figures, misrepresenting identity or financial circumstances, and using a bank card that one knows is not theirs at an ATM. The law focuses on the defendant’s knowledge and intention, not on successful deception or actual financial consequence.

Key Term: dishonesty
The current test for dishonesty is objective, as set out in Ivey v Genting Casinos [2017] UKSC 67. The fact-finder must first ascertain the defendant’s actual knowledge or belief as to the facts, and then decide whether, by the standards of ordinary decent people, the conduct was dishonest. The defendant’s own belief as to honesty is irrelevant.

Key Term: gain or loss
Section 5 provides that “gain” includes keeping what one has or obtaining something new, while “loss” refers to not getting what one might get as well as losing something already held. Both include temporary and permanent outcomes.

Worked Example 1.1

Question:
Jasmin advertises a laptop for sale online, claiming it is new and unused. She knows it is second-hand and faulty. She sells it to Alex for full price. Has Jasmin committed fraud by false representation?

Answer:
Yes. Jasmin made a false representation about the laptop’s condition, acted dishonestly according to the standards of ordinary decent people, and intended to make a gain for herself by selling it at full price.

Implied Representations

Note that silence or omission can sometimes amount to a representation if, in the circumstances, the defendant’s conduct conveys a message which is untrue or misleading—such as presenting an item for refund that is not eligible, or continuing to use a product that is only available to certain users (e.g. staff discount cards being used for friends).

Fraud by Failing to Disclose Information

Fraud by failing to disclose information arises where an individual, dishonestly and with intent to gain or cause a loss (or risk of loss), fails to disclose information that they are under a legal duty to disclose (s 3).

Key Term: legal duty to disclose
The Act does not define "legal duty"; however, it refers to duties arising from statutes, contract law (including implied terms and contracts of utmost good faith such as insurance contracts), express or implied terms in a commercial context, customs of a trade or market, or fiduciary relationships such as those of trustee/beneficiary or director/company.

A legal duty to disclose may arise in many practical contexts:

• Insurance applicants must disclose facts material to the risk.
• Employees may be required (under statutory or contractual terms) to provide accurate information about prior convictions or qualifications.
• Company officers may be obliged to disclose relevant interests.

The prosecution must prove:

• a legal duty to disclose existed
• the defendant failed to disclose information required by that duty
• the failure was dishonest
• the defendant intended, by failing to disclose, to make a gain for themselves or another, or cause or risk a loss to another

The offence can arise by silence, partial or delayed disclosure, or by misleading statements that fall short of full truthfulness.

For the purposes of this offence, the legal duty must be a matter of law, not mere morality. If a person is genuinely unaware of the duty, this may negate dishonesty, but awareness of the facts giving rise to the duty is generally attributed to the defendant.

Worked Example 1.2

Question:
Omar applies for car insurance but fails to mention a recent driving ban, which he is required to disclose. He does so to obtain cheaper insurance. Is this fraud by failing to disclose?

Answer:
Yes. Omar had a legal duty to disclose the ban, failed to do so dishonestly, and intended to make a financial gain.

A simple failure is not sufficient: the prosecution must show the legal duty, the failure, and that both were dishonest and intended to achieve gain or risk loss by that failure.

Fraud by Abuse of Position

Fraud by abuse of position applies to those placed in circumstances of trust, where they are expected to safeguard (or at least not act against) the financial interests of another and dishonestly abuse that position intending to make a gain or cause a loss (or risk of such) (s 4).

Key Term: abuse of position
Section 4 captures a broad range of trusted positions. While the term "position" is not exhaustively defined, it includes not just professional fiduciaries but any relationship where the defendant is reasonably expected to safeguard another’s financial interests due to their role or responsibility. Typical examples include employees, company directors, trustees, agents, carers, or anyone with financial oversight for another.

Abuse of position can be by act or omission, and covers scenarios such as:

• An employee diverting business opportunities or customer payments for personal gain.
• A carer or family member misappropriating money from a vulnerable adult.
• A trustee or director acting to the detriment of the trust or company for personal benefit.

The prosecution must prove:

• the defendant occupied a relevant position
• they abused that position (i.e., acted improperly or failed to act when required)
• they did so dishonestly
• they intended to make a gain or cause a loss

Liability here may overlap with other offences such as theft, but where the defendant has not “appropriated” property as in theft, or where the breach is more general or not easily subject to property rights, s 4 provides a broader net.

Worked Example 1.3

Question:
Priya is a care worker for an elderly client. She uses the client’s bank card to withdraw money for herself, without permission. Has Priya committed fraud by abuse of position?

Answer:
Yes. Priya was in a position of trust, abused that position dishonestly, and intended to make a gain.

Positions of trust are widely defined and can include both formal financial relationships and informal domestic or caregiving relationships, provided an expectation of safeguarding another's financial interests arises.

The Test for Dishonesty

The law on dishonesty in fraud was modernised in Ivey v Genting Casinos [2017] UKSC 67. The approved test is as follows:

• Ascertain the defendant’s actual knowledge or belief as to the facts (a subjective inquiry).
• Judge the defendant’s conduct by the objective standards of ordinary decent people: would such conduct be considered dishonest?

The defendant’s personal views about the propriety of their actions are irrelevant. This is a marked departure from the previous approach (see R v Ghosh [1982] QB 1053, no longer good law). The focus is whether, in light of what the defendant knew or believed, their conduct would be considered dishonest by ordinary standards.

Dishonesty must always be proved by the prosecution. If the facts are ambiguous, or there is doubt about the knowledge or belief of the defendant, it is for the prosecution to satisfy the jury of dishonesty beyond reasonable doubt.

Exam Warning Always apply the Ivey objective test for dishonesty in the context of current fraud offences; the older subjective approach under Ghosh is no longer used.

Application in Practice

It is often necessary to determine whether a defendant's explanation for their conduct is genuine and, if so, whether they can claim to have acted honestly—such as believing they had a right to deal with the property or entitlement to make the application.

Gain and Loss

The concepts of gain and loss in the context of fraud are defined widely in section 5 of the Act. Both terms refer to retaining or keeping something as well as gaining something new, and both include temporary or permanent outcomes. Similarly, “loss” includes not simply actual loss but also being exposed to a risk of loss. The gain or loss must relate to money or to property (as defined by the Theft Act 1968), but does not include services.

It remains necessary for the prosecution to show that the intention to make a gain or cause a loss was linked to the act or omission; it is not sufficient that a person acted dishonestly for an unrelated reason.

Defences to Fraud

There is no specific statutory defence to fraud under the Act, but all general defences in criminal law are available and relevant. In practice, most defences to fraud will seek to negate one of the core elements of the offence—principally dishonesty or the required intention. The most significant are:

• Absence of dishonesty: If the evidence suggests the defendant genuinely believed they were acting properly or honestly, and this belief is credible (even if unreasonable), they will lack the mental element of dishonesty and cannot be convicted.
• Claim of right: If a defendant honestly believed they had a legal right to the property or gain, this can negate dishonesty—even if that belief was mistaken or unreasonable, provided it was genuinely held.
• Duress: If charged with fraud and the defendant can show that they were compelled to act by an immediate threat of death or serious injury, the defence of duress may apply. This requires an evidential basis, after which the legal burden shifts to the prosecution to disprove duress beyond reasonable doubt.
• Automatism or other “negating” defences: In rare cases, the defendant may claim that their actions were wholly involuntary (e.g., automatism or certain forms of medical incapacity), thereby denying the actus reus.

These can be combined with other complete defences (such as mental incapacity or infancy, where applicable), but for fraud, the principal factual disputes are likely to centre on dishonesty and intention, rather than technical rules regarding capacity or duress.

The legal burden ordinarily remains with the prosecution, save for specific statutory defences (not present in the Fraud Act 2006).

Worked Example 1.4

Question:
Samira takes back a bicycle she believes is hers, but it actually belongs to someone else. She is charged with fraud by false representation for claiming ownership. Is she guilty?

Answer:
If Samira honestly believed she had a legal right to the bicycle, she is not dishonest and cannot be guilty of fraud.

Revision Tip

When analysing potential fraud, always check that both dishonesty (using the Ivey test) and intent to make a gain or cause a loss are present and provable. Absence of either means the offence is not made out.

Summary

By understanding the elements of each of these fraud offences, you are prepared to analyse problem scenarios involving issues such as representations (express and implied), the existence of legal duties (contractual, statutory, fiduciary), and the multitude of positions that might entail a legal expectation to protect another’s interests. Remember that defences concentrate on the absence of the mens rea—dishonest intent—as the standard obstacle to criminal liability.

Key Point Checklist

This article has covered the following key knowledge points:

• Fraud under the Fraud Act 2006 can be committed by false representation, failing to disclose information, or abuse of position.
• Each fraud offence requires proof of both actus reus (the prohibited act or omission) and mens rea (dishonesty and intent to make a gain or cause a loss).
• The Ivey v Genting Casinos test is used to determine dishonesty: first ascertain the defendant’s knowledge or belief as to the facts, then judge the conduct objectively against ordinary standards.
• Gain and loss are defined broadly under s 5 Fraud Act 2006, referring to keeping what one has or obtaining something new, actual or risked, permanent or temporary.
• Principal defences to fraud allegations are rooted in absence of dishonesty, claim of right, and duress; these target the core elements of liability and must be understood both in law and in practical scenario application.

Key Terms and Concepts

• actus reus
• mens rea
• false representation
• representation
• dishonesty
• gain or loss
• legal duty to disclose
• abuse of position