1

I know one person who approaches many business for services and defaults on his promise to deliver. Basically he takes the money and simply runs away. This has happened multiple times and people say he is a scammer.

He has lost countless civil lawsuits as well but none of them could be recovered as he has zero assets. He cleverly hides them all.

For a jurisdiction, I am in Australia, but I would like this question to be general.

i.e.

If a person keeps making business promises to deliver but does not deliver (like a Scam), could this be considered a Crime?

4
  • 1
    Does this answer your question? What is the difference between civil fraud and criminal fraud?
    – Nij
    Aug 31 at 3:42
  • 1
    Thanks but not really. It mean it doesn't explain when a Civil matter can be classified as a criminal fraud Aug 31 at 4:39
  • 3
    A civil matter cannot be classed as criminal. That's the entire point of a difference between the two categories. An action can fall under both, but one cannot be the other.
    – Nij
    Aug 31 at 5:14
  • As the OP said, the "duplicate" question's answers do not answer this question. I'm voting to keep open. Sep 6 at 2:39
3

Fraud

There are a number of offences that fall under the broad category of fraud. The most relevant for this type of behaviour is in s192E of the Crimes Act 1900: "Obtain financial advantage or cause financial advantage by deception" which carries a maximum penalty of 10 years.

In order to understand what the prosecution needs to prove beyond reasonable doubt it is useful to look at the suggested jury direction from the Criminal Bench Book (a crib sheet for judges):

[The accused] is charged that [he/she] by a deception dishonestly [obtained a financial advantage for himself/herself] or [kept a financial advantage that he/she had].

The Crown contends that the financial advantage is [set out the financial advantage]. It does not matter whether the financial advantage alleged was permanent or temporary.

The deception that the Crown alleges that the accused perpetrated was [set out the deception]. It must prove beyond reasonable doubt that the financial advantage was obtained as a result of that deception and that the accused perpetrated that deception intentionally to obtain the financial advantage or acted recklessly in that regard. Here reckless means foreseeing the possibility that as a result of the deception [he/she] would [obtain a financial advantage] or [retain the financial advantage that he/she had] and carrying on with the deception notwithstanding that possibility.

However, the Crown does not need to prove a particular person was deceived.

The Crown must prove beyond reasonable doubt that the accused acted dishonestly in [his/her] deceptive conduct. Dishonest in this context means that the accused acted dishonestly according to the standards of ordinary people. You as ordinary members of the community determine what is dishonest conduct in this regard. You must not only find beyond reasonable doubt that the accused acted dishonestly in deceiving [the victim] but also that [he/she] knew that [his/her] conduct was dishonest according to the standards of ordinary people.

It is not enough that a person is shithouse at delivering on their contractual obligations: even repeatedly so. That just makes them a bad business person, not a criminal. They must have acted dishonestly and deceived their victims from the get-go with the intention of not fulfilling their bargain or have been reckless as to their ability to do so.

If you believe that you have knowledge of criminal fraud, you should report it to the police who have the discretion to investigate and prosecute. As a general rule, police devote fewer resources to non-violent crime than they do to violent crime and less to crimes where the victim has handed over property/money than those where it was taken from them involuntarily so fraud tends to be lower on their radar.

1
  • Thanks Dale, always a pleasure to hear from you. Yes, that General rule about police is true. But would the Police act faster if all the evidences were compiled and written in a nice investigation report, possibly through the help of a Private Investigator? Aug 31 at 8:31
2

Jurisdiction:

Yes, it can be a crime.

Fraud

Section 2 of the Fraud Act 2006:

2(1) - A person is in breach of this section if he (a) dishonestly makes a false representation, and (b) intends, by making the representation (i) to make a gain for himself or another, or (ii) to cause loss to another or to expose another to a risk of loss.

2(2) - A representation is false if (a) it is untrue or misleading, and (b) the person making it knows that it is, or might be, untrue or misleading.

Note that this requires mens rea. The representation must be made dishonestly, the person making it must know that it is or might be untrue or misleading, and they must intend a gain or to cause a loss. As with Dale's answer, it is not sufficient that the trader is merely incompetent.

Consumer law

Some possibly relevant provisions of the Consumer Protection from Unfair Trading Regulations 2008 are:

3(1) - Unfair commercial practices are prohibited.

3(4) - A commercial practice is unfair if (a) it is a misleading action under the provisions of regulation 5; [...] or (d) it is listed in Schedule 1.

5(1) - A commercial practice is a misleading action if it satisfies the conditions in either paragraph (2) or paragraph (3).

5(2) - A commercial practice satisfies the conditions of this paragraph (a) if it contains false information and is therefore untruthful in relation to any of the matters in paragraph (4) or if it or its overall presentation in any way deceives or is likely to deceive the average consumer in relation to any of the matters in that paragraph, even if the information is factually correct; and (b) it causes or is likely to cause the average consumer to take a transactional decision he would not have taken otherwise.

5(4) - The matters referred to in paragraph (2)(a) are (a) the existence or nature of the product; (b) the main characteristics of the product (as defined in paragraph 5); (c) the extent of the trader’s commitments; (d) the motives for the commercial practice; (e) the nature of the sales process; [...]

5(5) In paragraph (4)(b), the “main characteristics of the product” include (a) availability of the product; [...]

Schedule 1, paragraph 5 - Making an invitation to purchase products at a specified price without disclosing the existence of any reasonable grounds the trader may have for believing that he will not be able to offer for supply, or to procure another trader to supply, those products or equivalent products at that price for a period that is, and in quantities that are, reasonable having regard to the product, the scale of advertising of the product and the price offered (bait advertising).

9 - A trader is guilty of an offence if he engages in a commercial practice which is a misleading action under regulation 5 otherwise than by reason of the commercial practice satisfying the condition in regulation 5(3)(b).

12 - A trader is guilty of an offence if he engages in a commercial practice set out in any of paragraphs 1 to 10, 12 to 27 and 29 to 31 of Schedule 1.

Note that unlike fraud, there is no need to establish mens rea in the case of misleading actions. It is sufficient that the commercial practice "is likely to deceive". However, the offence listed in paragraph 5 of schedule 1 does require mens rea ("...reasonable grounds the trader may have for believing that he will not be able to...").

Your Answer

By clicking “Post Your Answer”, you agree to our terms of service, privacy policy and cookie policy

Not the answer you're looking for? Browse other questions tagged or ask your own question.