Charging decisions are tough. The size of trading standards investigations has expanded dramatically in recent years to cope with the explosion of retail sales via the internet. Often, any true criminality is masked and its extent only becomes apparent well into the course of the investigation.
The correct charges can be difficult to determine but can make or break a case. Correct charging from the outset can result in early pleas and the avoidance of a trial where, as experience informs, anything can go wrong… and often does. It can also avoid potential abuse of process arguments as prosecutors seek to amend charges skywards to reflect evidential developments.
Between 2006 and 2008 the Labour Government introduced two of the most potent and effective tools to help trading standards departments in the fight against crime: the Fraud Act 2006 and the Consumer Protection from Unfair Trading Regulations 2008 (the CPRs). The introduction of the two regimes overhauled the legal landscape.
This article concentrates on the most common and most effective offences: Fraud by False Representation contrary to section 2 of the Fraud Act 2006 and its CPR counterpart, Misleading Action contrary to regulations 5 and 9 of the Consumer Protection from Unfair Trading Regulations 2008. It aims to compare the advantages and disadvantages and explain why a combination of the two can be a potent tool.
Fraud as a state of mind
Fraud by false representation1 is the acme of legislative drafting. Derived from the Law Commission’s comprehensive 2002 report, the offence includes any representation as to fact or law, including the state of mind of the person making the representation or any other person. It can be express or implied. It could be the shrug of the shoulders when asked to comment on the quality of prior workmanship. It could be the entry of data on a system or device – the chip and PIN machine for example. However, it does not require the act to which the representation relates to have actually been carried out, only that the words/gestures/PIN number were spoken/written/grunted/input for gain or to cause loss to another.
The representation must be false. By definition2, it is ‘false’ if it is untrue or even misleading and the person making it either knows it is untrue, misleading or even that it might be. It is the state of mind which lies at the heart of the offence.
Since an amendment to the Criminal Procedure Rules in 2015, this simple comprehensive offence can include a course of conduct and involve numerous representations over days, weeks, months or even years under the same single count.3 However the offence, existing as it does in the mind of the defendant, does require the prosecution to prove that criminal stalwart, dishonesty.
In a recent decision, the famous dishonesty “Ghosh test,”4 which had been taught to law students for more than 35 years, was revealed by the Supreme Court to be wrong. Labouring in their legal laboratories, the learned Law Lords found that the two-limb test that what was done was dishonest according to the standards of reasonable and honest people (the jury) and secondly that the defendant knew by those standards what he or she did was dishonest, was in error.
In fact, the actual test for dishonesty requires the fact finder to first determine the genuinely held belief of the defendant and then determine whether it was dishonest by applying the objective standards of ordinary decent people. In practice, the prosecution must now prove that illusive (and newly defined) mindset.
Examples of evidence from which the state of mind may be inferred may include evidence that the defendant is on notice that what they are doing is unlawful; past warnings by trading standards officers; previous interviews under caution from earlier investigations; previous cautions/convictions or even evidence which did not lead to a prosecution or resulted in an acquittal.
Standard of proof
Fraud requires proof of a guilty mind. The regulatory equivalent does not. The trader is liable irrespective of intent if the action is misleading (subject to an “all reasonable precautions and exercised all due diligence” defence5).
An offence of strict liability does not require the prosecution to prove that inferred mental element of the offence. It consists of a commercial practice, defined as “any act, omission, course of conduct, representation or commercial communication by a trader”6.
Prosecutors must prove that the practice contained false information or that its overall presentation deceived or is likely to deceive the average consumer in relation to features like the nature of the product, main characteristics, nature of the sales process, price etc. Seemingly a higher bar than fraud?
Further complications arise in the strangulated and non-jury friendly wording taken from the EU Directive that the offence “causes or is likely to cause the average consumer to take a transactional decision he would not have taken otherwise”.
Crown Court Judges have struggled when directing juries with the strangulated and unfamiliar wording taken from the EU Directive and reflected in the CPRs. It is a common experience for advocates to observe the trance-like state which descends over the faces of excited jurors hoping for a murder or robbery trial… only to be read the wording of the CPR charges which, of necessity, must contain all the elements of the offence. So much simpler to allege the universally understood label ‘Fraud’ in order to pique juries’ interest.
Cunning defence counsel may seek to confuse and question who exactly this “average consumer” might be? Is it you members of the jury? Or is it Mr Jones, the victim? Or perhaps the offence is victimless and predicated on that old legal trope, the hypothetical man on the Clapham Omnibus? What about the trading standards officer in a test purchase? Can he or she be the “average consumer”?
In a recent decision of Warwickshire CC v Halfords Ltd. (2019) 1 WLR 3597, the High Court considered the point. A trading standards officer had booked a vehicle in for a full service. The vehicle had previously been examined and defects noted by a prosecution expert. Various faults were neither identified or rectified.
The District Judge at first instance held that the officer was not a “consumer” within the meaning of the Regulations.On an application to state a case, the Divisional Court held that a “commercial practice” (for the purposes of the Unfair Commercial Practices Directive7 could be constituted by or derived from a test purchase of a product including a service that was generally promoted and intended for purchase by consumers, even where the purchaser was not actually a consumer.
The Prosecutor’s perfect victim (accepting that the wish is that such matters never come to pass) is perhaps the mythical little old lady who lived alone and has been the victim of doorstep crime. She has suffered the loss of savings, is frightened, lucid, and participated in an ABE interview to record the evidence in the case. But is this victim the “average consumer”? Strictly speaking perhaps not. But surely proof of an actual sale will always provide the best evidence that the “average consumer” would have taken such a decision. It would require a bold defence advocate to argue that Mrs Jones, the mythical old lady of the previous paragraph, may well have not bought the item if she knew then what she knows now, but that the average consumer would not!
Assistance can be found in the now somewhat outdated Office of Fair Trading Guidance8 which accompanied the introduction of the Regulations. Practitioners may be assisted by the examples given within the guidance as illustrative of the scenarios envisaged as falling within the umbrella of the Regulations. What of the consequences?
Fraud by false representation carries a far greater sentence – a maximum of 10 years imprisonment. There is also a Sentencing Guideline which a simple search of the internet will locate, which sets out the stages that the Court will undergo in taking account of harm, culpability and calculating the sentence.
Sentences are therefore higher, more structured and more capable of prediction than the assorted fact-specific CPR offences which occasionally reach the Court of Appeal.
The added element of “mens rea” or “guilty mind” that dishonesty imputes is reflected by Parliament, the Sentencing Guidelines and the judiciary in significantly higher sentences. However, the concepts of “culpability” and “harm” still form the cornerstone of the sentencing process9 in relation to CPRs. Many of the recent Court of Appeal judgments highlight the need for these two statutory limbs of the sentencing process to be considered.
A recent example of this in a CPR context is the case of R v Malik (2020) EWCA 957, where sentences of 14 months imprisonment were appealed following a trial in connection with the provision of substandard and misleading car valeting services at Gatwick Airport. Lord Justice Coulson, giving the lead judgment, considered arguments about harm and culpability. It was held that when considering the issue of the custody threshold, the trial Judge was “par excellence” best placed to consider the issue. The appeal was dismissed.
What to charge?
In many instances, the two offences will both be made out from the same evidence. The only material difference to the evidence required to prove the offence is that in relation to the mental element of dishonesty.
What occurs in the mind of a defendant will (subject to a confession in interview) always be a matter inferred from the evidence. In some instances the evidence may demand that dishonest intent is admitted to facilitate a length of sentence to meet the justice of the case. But the line between the two offences is often blurred.
Where the evidence permits, it is common practice to have alternative counts. For example, it is standard practice throughout the land for the CPS to charge a nasty assault as both a section 18 GBH with intent and a section 20 GBH as an alternative charge. If the jury are unsure of the intent they can still convict on the lesser charge (but not both).
This approach has benefits. Wily defence advocates will be alert to the huge disparity of sentencing powers and dangle the carrot of pleas before a defendant to the lesser offences to obviate the risk of the greater sentence.
Whether to accept those pleas is exclusively a matter for the prosecuting authority. Prosecuting practitioners beware the cunning defence advocate seeking to persuade agreement that for regulatory offences the jurisdiction of the Magistrates’ Court is retained. The maximum sentence in the lower court is but a fine. Community Orders, custodial sentences or confiscation proceedings must be sent to the Crown Court.
Prosecutors should also be alert to the necessity in clear cases of dishonesty to require an admission or conviction to ensure that justice is done and a condign sentence imposed. A wrongly compromised case, resulting in a light sentence, can incur judicial and victim wrath when the defendant walks free with implications beyond the doors of the court.
Charging decision are tough. But the canny Prosecutor in the right case, where the evidence exists, can have their cake, eat it… and ensure that justice is done.
▪ In R v Greig (2010) EWCA 1183 rogue traders overcharged and obtained £6,850 for garden works valued at £300. The disparity of value was so great that dishonesty could clearly be inferred. But where is the line? What if they had charged £3,000, £1,000 or £600? It is a question of fact to be considered in every case. The line is unclear.
▪ A more recent and less extreme illustrative example can be found in the case R v Jackson (2017) EWCA 78 where a 97-year-old was charged £350 for valueless work. Although the court was only considering sentence, imprisonment was upheld.
▪ In R v Montague (2015) EWCA 902, the court considered the sentences for rogue traders. Building works were fraudulently charged at £41,000 but assessed by a surveyor witness for the prosecution to be worth no more than £15,000 and fraudulently represented as £41,000.
About the author
Alexander Greenwood is Barrister at Law at Apex Chambers. He is a contributor to ‘Consumer and Trading Standards: Law and Practice’ (the ‘Pink Book’ 2020 onwards).
- Section 2(1) of the Fraud Act 2006
- Section 2(2) of the Fraud Act 2006
- CPR 10.2.(2) and para 11 to 14 Criminal Practice Direction II (Preliminary proceedings)
- R v Ghosh (1982) 75 Cr App R 154
- CPR reg 17
- CPUTR 2008 Reg 2
- Directive 2005/29/EC
- Click here
- Section 143 Criminal Justice Act 2003