Fraud Lecture - Hands on Examples

The following scenario will assess your knowledge of the fraud offences and give you a chance to try applying the law in a practical context.

Read over the following passage and pull out and key facts and legal issues as you go. Once you have done this try and identify what relevant offences arise on the facts and if you’re feeling really confident, have a go at putting together an answer!

If you don’t feel confident just yet, there is absolutely no need to worry! These types of questions take time to get your head around and you’re taking all the right steps just by having a look and familiarising yourself with them. A step by step outline answer has been provided for you that contains pointers as to how you should go about addressing the scenario. Use this as guidance in putting together or checking your own answer. There is nothing raised in this question that we haven’t already covered so if you get stuck look back over the notes. You’ll find that you have all the tools necessary to do a great job!

Ben is going on a big night out to see a famous DJ with his friends Will and Alex. It is day 5 of Freshers Week at their university and Ben has no money as he spent it all earlier in the week, however Ben does not want to admit this in front of his new friends. As they are arriving at the club Ben tells Will and Alex that he will meet them inside as he needs to run back to the flat to pick up his ID. Once Ben sees that the other two have gone inside the club Ben sneaks round the back and enters through the fire exit in order to avoid paying the entrance fee on the door.

Once inside Ben reconvenes with Will and Alex and the boys go to the bar to buy drinks. Ben has taken out his flat mate Sebastian’s ID with him. Sebastian is a Freshers Rep and the club are offering free drinks to the Reps that night in order to thank them for their hard work throughout the week. Ben show’s Sebastian’s ID to the bar man and as it is very dark and busy the bar man cannot check it properly and assumes that the picture is of Ben. Ben is given Gin and Tonic for free.

Later that week, Ben gets home sick and misses his girlfriend a lot. He decides that university is not for him and that he will quit his studies immediately. Ben is in receipt of a student loan never tells his loan provider that he is no longer studying and continues to receive his loan payments, using them to fund rent on a new flat back in Nottingham.

Discuss Ben’s liability for any potential fraud offences.

Nightclub entry

  • Possible offence of obtaining services dishonestly under s.11 of the Fraud Act 2006.
  • Actus Reus
  • Obtaining services.

Ben gains access to the nightclub facilities and the DJ’s performance.

  • Payment required but not made

There was a fee due on the door in order to gain access to the club but this was not paid.

  • Dishonesty caused the services to be obtained

But for Ben’s actions of sneaking through the fire exit, he would not otherwise have gained access to the club. It was the only reason for his access to the club, and thus causation is established.

  • Mens Rea
  • Dishonesty

Applying Ghosh, it is likely that Ben’s conduct would be considered dishonest by a reasonably honest person and also that Ben knew what he was doing was dishonest. This is evidenced on the facts buy him keeping his actions secret from his friends.

  • Knowing that payment was required

Ben knew that payment was required on the door which was why he did not enter the club that way.

  • Intending to avoid payment in whole or in part

By sneaking around the back through the fire exit Ben intended to avoid making payment in whole.

  • Therefore, on the facts it is likely that Ben will be found guilty of the s.11 offence.

Free Drink

  • Possible offence under s.2 of the Fraud Act 2006 of fraud by making a false representation.
  • Actus Reus
  • False representation

It can be seen that through showing Sebastian’s ID at the bar, Ben was falsely representing to the bar man that he was the person in the picture, and thus that he had earned the free drink. It could be argued that this representation was express or implied but either way, applying s.2(4) it will constitute a representation for the purposes of the offence.

  • Knowing representation was false

Applying s.2(2) Ben knows that he is not Sebastian and that this is untrue so this is easily satisfied on the facts.

Mens Rea

  • Dishonesty

Applying Ghosh it is likely that Ben’s actions will be deemed dishonest by a reasonably honest person and that Ben knew they were dishonest.

  • Intention to make a gain, cause a loss or risk of loss

By showing the ID Ben is not merely just intending to convince the bar man that his name is Sebastian, he is intending to take advantage of the free drink offer, and thus applying s.5 he is making a gain of the drink and the money that he has already by not parting with it for a drink.

  • Applying the law to the facts it is likely than Ben will be guilty for a s.2 offence.

Loan Payments

  • This is a possible offence of fraud by failing to disclose under s.3 of the Act if there exists a legal duty to inform the loan provider of the change in circumstance.
  • Actus Reus
  • Legal duty to disclose information is in existence

If there is a contractual duty under the loan agreement to inform the loan provider of any change in circumstance, then this will satisfy this element of the actus reus. Similarly, the provision of student loans can be likened to social security access and a duty will arise.

  • Failure to disclose the information

Ben does not inform his loan provider of that he is no longer studying which assuming that he has a duty to do so satisfies this element of the actus reus.

  • Mens Rea
  • Dishonesty

Applying Ghosh it is likely that not informing the loan provider would be seen as dishonest by a reasonably honest person and that Ben is aware of that.

  • Intention to make a gain or cause a loss or risk of loss

Ben intends by not informing the loan provider of his change in circumstance that he will continue to receive the payments, and thus make a financial gain.

Although this is a loan that Ben will one day have to repay this is irrelevant for the purposes of the offence as applying s.5(2)(b) of the Act there is no requirement of a permanent gain or loss. The temporary gain of the money is sufficient.

  • Assuming that Ben is under a legal duty to disclose the information, Ben will be guilty of a s.4 offence. In the unlikely event that there is found to be no such duty then applying the law in R v Rai there may still be an offence of fraud by making a false representation in that Ben’s student status is an on-going representation that becomes false when he ceases to be a student but intends to make a gain of access to the money in order to rent a flat.

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