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What is the Fraud Act 2006?

What is the Fraud Act 2006?

It is a criminal offence to commit fraud. Fraud is described as “a wrongful or criminal deception intended to result in financial or personal gain”.

The Fraud Act 2006 came into force in January 2006 and was made to replace the eight deception offences in the Theft Act 1968/78 - which was subject to a lot of criticism regarding the number of offences that overlapped one another, which made prosecutions difficult.

Types of Fraud

The Fraud Act identifies fraud as one offence that can be committed in three separate ways:

Fraud by false representation

This type of fraud is when somebody dishonestly makes a false representation with the intent to gain or cause loss to another. Representation is considered false if the maker of the statement knows that it is, or might be, untrue or misleading.

To break it down:

  • made a false representation 
  • dishonestly 
  • knowing that the representation was or might be untrue or misleading 
  • with intent to make a gain for himself or another, to cause loss to another or to expose another to the risk of loss.

Fraud by failure to disclose

An individual is in breach of this section of the Act if he “dishonestly fails to disclose to another person information which he is under a legal duty to disclose.

To break it down:

  • failed to disclose information to another person 
  • when he was under a legal duty to disclose that information 
  • dishonestly intending, by that failure, to make a gain or cause a loss.

Fraud by abuse of position

This is committed by an individual who occupies a role in which they are expected to protect the financial interests of another but then dishonestly abuses that position, intending to make a gain for themselves or to cause loss to another. 

To break it down:

  • occupies a position in which he was expected to safeguard, or not to act against, the financial interests of another person 
  • abused that position 
  • dishonestly 
  • intending by that abuse to make a gain/cause a loss

Source: https://www.cps.gov.uk/legal-guidance/fraud-act-2006

What’s the difference between external and internal fraud?

Within these broad headings, there are actually around 100 different types of fraud. There are some that originate outside an organisation (external fraud) and some coming from within an organisation (internal fraud).

Internal fraud is where somebody defrauds their own organisation, its suppliers, or customers. This can include anything from exaggerating expense forms to claiming for journeys that were never actually made.

External fraud is where somebody from outside your organisation attempts to defraud your organisation or gain access to your stored data to use to commit fraud. Fraudsters can do this through compromising companies IT systems - so it is essential that you know how to prevent this.

Training staff on Fraud Prevention

Here at iHASCO, we offer a Fraud Awareness & Prevention Training course to educate employees and managers alike on how to best protect their organisation from fraudulent activity.

Seeing as in 2017 there were a staggering 272,980 fraud offences committed in the UK alone, it is clear that fraud is an issue that lays deep within an organisation, meaning that training should be completed by every member of staff - and not just those in senior positions.

Claim your no-obligation free trial to any of our courses today!

https://www.ihasco.co.uk/courses/detail/fraud-awareness-training