What fraud is: the Fraud Act 2006

Fraud is dishonesty with the intention of making a gain, or causing someone else a loss or a risk of loss. The main criminal law on fraud in England, Wales and Northern Ireland is the Fraud Act 2006. Scotland deals with fraud under its own common law, but the behaviour it covers is essentially the same.

A key point that surprises many people: fraud is about intent, not outcome. The offence is complete as soon as someone dishonestly makes a false representation intending to gain or cause loss. They don't need to succeed, and the victim doesn't need to lose a penny, for a crime to have been committed.

The three ways of committing fraud

The Fraud Act 2006 sets out three ways the single offence of fraud can be committed.

Fraud by false representation

Dishonestly making a representation that is untrue or misleading, intending to make a gain or cause a loss. This is the most common form. Examples include submitting a false invoice, lying on a CV or a loan application, or an email that pretends to come from a supplier.

Fraud by failing to disclose information

Dishonestly failing to disclose information you have a legal duty to disclose, again with intent to gain or cause loss. An example would be failing to declare a medical condition on an insurance application when the policy requires it, or an employee failing to declare a conflict of interest they are contractually obliged to report.

Fraud by abuse of position

Dishonestly abusing a position in which you are expected to safeguard, or at least not act against, the financial interests of another person or organisation. This covers, for example, an employee diverting company payments to their own account, or someone with power of attorney helping themselves to the money they are supposed to protect.

Fraud under the Act is a serious offence, carrying a maximum sentence of ten years' imprisonment on conviction in the Crown Court. Throughout this course, keep those three routes in mind. Almost every workplace fraud you will meet is a variation on one of them.