Fraud by False Representation – Fraud Act 2006

Some consumers believe that if someone sells a product or service dishonestly by telling lies, exaggerating, or otherwise misleading the consumer, it is unethical but legal. However, in reality, it is very much illegal to do this. It is known as 'fraud by false representation.' In the UK, fraud by false representation is legislated by the Fraud Act 2006, section 2.

The text of the ”Fraud Act 2006, section 2: Fraud by false representation” is copied below.

“Fraud by false representation

1. A person is in breach of this section if he—

   1. dishonestly makes a false representation, and
   2. intends, by making the representation—

      1. to make a gain for himself or another, or
      2. to cause loss to another or to expose another to a risk of loss.

2. A representation is false if—

   1. it is untrue or misleading, and
   2. the person making it knows that it is, or might be, untrue or misleading.

3. “Representation” means any representation as to fact or law, including a representation as to the state of mind of—

   1. the person making the representation, or
   2. any other person.

4. A representation may be express or implied.

5. For the purposes of this section, a representation may be regarded as made if it (or anything implying it) is

   submitted in any form to any system or device designed to receive, convey or respond to communications (with

   or without human intervention)."

There are many investment scams that are in breach of this law, especially trading or investing training courses or stock tip subscription websites. In their sales tactics, fraudsters falsely claim to have achieved huge returns and generated substantial wealth using their strategies. This constitutes fraud by false representation. Consumers would not purchase the training course or subscription without these fabricated claims. Typically, fraudsters go to great lengths to entice people into believing their falsehoods. This includes falsifying videos or screenshots that imply returns, writing fake reviews, or employing people to pretend as witnesses or success stories.

Individuals who commit this type of fraud are usually in breach of other laws as well. They often violate the "Consumer Protection from Unfair Trading Regulations 2008," the "Trade Descriptions Act 1968," and the "Companies Act 2006”.

If you are a victim or witness to this type of fraud, you can submit a report to Action Fraud, either via telephone or through their website. Action Fraud is the agency in the UK tasked with collecting information on fraud and passing it to the relevant agency or law enforcement for investigation.