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You are here: BAILII >> Databases >> The Law Commission >> FRAUD [2002] EWLC 276(8) (01 July 2002) URL: http://www.bailii.org/ew/other/EWLC/2002/276(8).html Cite as: [2002] EWLC 276(8)

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PART VIII

OBTAINING SERVICES DISHONESTLY

8.1      Because it requires proof of deception, the offence under section 1 of the 1978 Act fails to catch a person who succeeds in obtaining a service dishonestly but without deceiving anyone. This may happen in various ways.

(1) The service may be obtained by the defendant's failure to disclose a material fact, rather than by a positive deception.^[1]

(2) The service may not be provided for the defendant personally, but for anyone who is there to receive it. For example, the defendant climbs over the fence of a football ground and watches the match without paying the admission charge.^[2]

(3) The service may not be provided directly by people at all, but through a machine. For example, the defendant downloads, via the internet, software or data for which a charge is made, or which is available only to those within a certain category of person who have paid to be included within that category, by giving false credit card or identification details; or receives satellite television transmissions by using an unauthorised validation card in a decoder.^[3]

(4) Some cases are a hybrid of types (2) and (3). For example, the defendant gives false credit card details to an automated booking system, or tenders a forged or stolen credit card to an electronic vending machine, and thus obtains a ticket for a journey or entertainment. There is no deception of the booking system (because it is not a person), nor of the staff who check the tickets of the passengers or audience (because the staff are only interested in whether each person has a ticket, not how they got it).

8.2      Case (1) would be caught by the new fraud offence which we recommend in Part VII above, because, for that offence, misrepresentation or non-disclosure would suffice.^[4] Cases (2) to (4) would not normally be caught by that offence, because they do not normally involve misrepresentation, wrongful non-disclosure or secret abuse of a position of trust^[5] but we think that they nevertheless ought to be criminal. In this Part we consider how the law might be extended in order to catch them.

Deceiving a machine?

8.3      One approach would be to extend the concept of deception so as to include the giving of false information to a machine as well as a person. There is a kind of precedent for this in the Forgery and Counterfeiting Act 1981. Under section 1, the offence of forgery consists in making a false instrument with the intention of using it to induce somebody to accept it as genuine. Section 10(3), however, provides that "references to inducing somebody to accept a false instrument as genuine … include references to inducing a machine to respond to the instrument … as if it were a genuine instrument".^[6]
8.4      In our informal discussion paper we proposed a general deception offence, but one which would have employed an extended concept of deception so as to catch (among other things) the "deception" of machines. The response convinced us that this approach was too artificial and would have introduced new difficulties in the ordinary case where it is a human being who is deceived. We are persuaded that we should tackle the problem head on. Rather than requiring deception but diluting its meaning, we need to accept that deception should not be essential at all. This is because, where a person dishonestly obtains a service by giving false information to a machine, the gravamen of that person's conduct is not the provision of the false information but the taking of a valuable benefit without paying for it.
8.5      Suppose, for example, that an internet website offers valuable information to subscribers, who are supposed to gain access to the information by giving their password. If a non-subscriber dishonestly downloads the information, it hardly matters whether she does so by giving the password of a genuine subscriber (and thus impliedly representing herself to be that subscriber) or by somehow by-passing the password screen altogether. To distinguish between these two situations would be like distinguishing between the person who puts a foreign coin into a vending machine and the one who gets at the contents by opening up the machine with a screwdriver, on the basis that the former makes a "misrepresentation" to the machine (that the coin is legal tender) whereas the latter does not. This would be absurd. Both are guilty of stealing the contents. Equally, in our view, a person who "steals" a service should be guilty of an offence, whether it is obtained by providing false information or in any other way.
8.6      Moreover, as the football match example shows, the problem is not confined to services provided by machines. Even where the service is provided by people, it may not be possible to regard it as being obtained by deception. It can hardly be said that the footballers are induced to play, and thus to provide a service for the spectators, by the spectators' implied representations that they have all paid the admission fee.^[7]

A "theft-like" offence

8.7      In Consultation Paper No 155 we provisionally concluded that obtaining a service without permission, but without the deception of a human mind, should be criminalised; and that this should be done not by extending the concept of deception but by extending the offence of theft or creating a separate, "theft-like" offence.^[8] Of 28 responses on this issue, only one disagreed.^[9] The Association for Payment Clearing Services in particular, agreed with us that "the notion of deception was problematic when no human being was deceived", and argued that "deeming" a machine to have been deceived was an unnecessary fiction which could only confuse juries and further complicate an already complicated area of law.
8.8      This show of support for our provisional conclusion has persuaded us that it was the right approach. We are therefore proposing that it should be an offence to obtain a service dishonestly – whether by deceiving a person, giving false information to a machine, manipulating a machine without giving it false information, or by any other dishonest means. This offence would be more analogous to theft than to deception, because it could be committed by "helping oneself" to the service rather than dishonestly inducing another person to provide it. The draft Bill would mark this difference of approach by repealing the existing offence under section 1 of the Theft Act 1978 and replacing it with a new one, rather than amending it. The analogy with theft also suggests that this offence, unlike the new fraud offence, should not be inchoate in character. It should require the actual obtaining of the service, not merely conduct intended to result in the obtaining of the service.
8.9      The offence is not intended to apply to the obtaining of anything which cannot reasonably be described as a service; but a service need not be provided by one person directly to another. It may be provided through the medium of a machine. Obviously this can be done by directly causing the machine to behave in the manner required – for example, by switching it on – but it can also be done indirectly. Where a machine is designed or programmed to perform a task automatically whenever certain criteria are satisfied at any future date, a person who causes the machine to perform that task on a particular occasion is obtaining a service, even though those responsible for designing or programming the machine may not be personally aware that the necessary criteria have been satisfied on that occasion. Even if such a person procures the performance of the task dishonestly, it is not obtained by deception. Our intention is that such conduct should in some circumstances be criminal despite the absence of deception. The new offence could be committed either by deception or by simply "helping oneself" to a service.^[10]
8.10      An offence consisting simply in the dishonest obtaining of a service, however, would in effect be a kind of general dishonesty offence. Any obtaining of services would be criminal if done in such circumstances that the fact-finders regarded it as dishonest. This would be inconsistent with the arguments we advanced in Part V above. In order to ensure that the offence does not catch an unacceptably wide range of conduct, therefore, we have concluded that two further elements should be required.
8.11      First, we believe that it should not be possible to commit the offence by omission alone. This offence would not, for example, be committed by a person who innocently happened to be on a boat and, despite hearing an announcement that anyone who had not paid for the next trip should disembark, remained on the boat and thus received a free ride. It might, however, amount to the commission of the general fraud offence.^[11]
8.12      Secondly, we envisage that the offence could be committed only where the dishonesty lies in an intent not to pay for the service as expected. This is more restrictive than section 1 of the 1978 Act. Under that provision, the services must be provided on the understanding that they have been or will be paid for, but it is not necessary to show that the defendant intended to avoid payment. For example, subject to the requirement of dishonesty, the offence under section 1 would be committed by a parent who lies about a child's religious upbringing in order to obtain a place at a fee-paying school, with every intention of paying the fees. It is not clear why Parliament thought it necessary to bring such conduct within the 1978 Act,^[12] and we do not think it should fall within the offence of obtaining services dishonestly. Unlike the fraud offence, this offence will not require any specific type of dishonest conduct: any dishonest act will suffice. To impose liability for such a potentially wide offence where the defendant is willing to pay the full amount required would in our view allow dishonesty to do too much of the work. If the defendant's dishonest act is a misrepresentation, and there is the necessary intent to make a gain or cause a loss, there will in any event be liability for the new fraud offence. We do not think it necessary to impose liability where those requirements are not satisfied and the defendant is willing to pay. Under our recommendation, therefore, the defendant would escape liability for the offence of obtaining services dishonestly not only (as under section 1 of the 1978 Act) where no payment is expected,^[13] but also where payment is expected but the defendant has paid in full, or intends to do so.
8.13      We recommend that any person who by any dishonest act obtains services in respect of which payment is required, with intent to avoid payment, should be guilty of an offence of obtaining services dishonestly. (Recommendation 3)

Services provided otherwise than on the understanding that they have been or will be paid for

8.14      In Consultation Paper No 155 we argued that, by requiring the services to be provided on the understanding that they have been or will be paid for, section 1 of the 1978 Act excludes two cases which ought to be covered.

(1) A service for which payment would normally be required may be provided on the understanding that in this case it will not be paid for, precisely because the deception results in the usual payment being waived.^[14]

(2) Some services of an economic character are provided in the hope of future gains rather than payment for the services themselves. A person does not commit the offence under section 1 by opening a bank account with a bad cheque, because banks do not charge for the opening of an account.^[15]

8.15      In Consultation Paper No 155 we provisionally proposed that the offence under section 1 should be extended so as to cover these two cases. Of the 29 respondents who considered this proposal, all but two agreed. However, we are now recommending a fraud offence, which would be committed by (among others) anyone who dishonestly makes a false representation with intent to make a gain or to cause a loss. Virtually all the cases within the two lacunae that we identified would fall within our fraud offence; and the rest are not, in our view, important enough to justify the additional complexity that this would entail.^[16] We therefore make no separate recommendation in respect of these cases.

Mode of trial and sentence

8.16      Like the new fraud offence, and for the same reasons, we believe that the new offence of obtaining services dishonestly should be triable either way. On conviction on indictment, the maximum sentence available for the existing offence of obtaining services by deception is five years,^[17] and we see no reason why the maximum for the new offence should not be the same. We recommend that the offence of obtaining services dishonestly should be triable either way, and on conviction on indictment should be punishable with up to five years' imprisonment. (Recommendation 4)

Note 1    It may be arguable that such non-disclosure counts as deception; but this is not clear, especially in the absence of a legal duty of disclosure. See para 2.22 above.    [Back]

Note 2    Under section 3 of the Theft Act 1978 Act a person commits an offence if he dishonestly makes off without paying for a service, knowing that payment on the spot is required or expected and intending to avoid payment. It could perhaps be argued that the dishonest spectator commits this offence on leaving the ground at the end of the match. But the section appears to envisage that the supplier of the service (or the supplier’s agent) will be aware of the individual defendant’s presence and will expect the defendant to pay before leaving. We do not think it could fairly be applied where the defendant is an unauthorised member of a group to which the service is provided, where it is expected that all members of the group will already have paid. The defendant enters intending to avoid payment, but that is not the purpose of his or her departure as it is in the case of the customer who leaves without paying a hotel or restaurant bill. The defendant does not “make off” but simply goes home.    [Back]

Note 3    This is an offence under s 297(1) of the Copyright, Designs and Patents Act 1988, but the maximum penalty is a £5,000 fine.    [Back]

Note 4    See paras 7.26 – 7.34 above.    [Back]

Note 5    It may be arguable that, where the defendant provides false information to a machine, there is a misrepresentation although there is no deception. In our view, however, this possibility is somewhat academic. Since we think that liability for the dishonest obtaining of services should not be confined to those who obtain services by providing false information (see paras 8.4 – 8.5 below), a separate offence of obtaining services would be needed even if the provision of false information to a machine did count as a misrepresentation for the purposes of the fraud offence; and, if there is a separate offence of obtaining services, we would expect prosecutors to use that offence against defendants who have obtained services from machines, even if such defendants have done so by providing false information and might arguably be guilty of the fraud offence as well.    [Back]

Note 6    Similarly, under section 72(3)(a) of the Value Added Tax Act 1994 a person commits an offence if he or she “with intent to deceive produces, furnishes or sends for the purposes of this Act or otherwise makes use for those purposes of any document which is false in a material particular”. But section 72(6) adds: The reference in subsection (3)(a) above to furnishing, sending or otherwise making use of a document which is false in a material particular, with intent to deceive, includes a reference to furnishing, sending or otherwise making use of such a document, with intent to secure that a machine will respond to the document as if it were a true document.    [Back]

Note 7    It is arguable that the service provided by the football club is not the playing of the match but simply admission to the ground, and that that service is not provided at all to the spectator who gains entry by unauthorised means. In our view, however, this is unrealistic. The paying spectators would hardly be satisfied if they were admitted to the ground but the advertised match was not played. All the spectators are obtaining the service provided by the players. The non-paying spectator is obtaining that service dishonestly, but is not obtaining it by deception.    [Back]

Note 8    We made no specific proposal as to how such an offence might be formulated, but proposed to return to the issue in the context of our planned review of the law of theft. Many respondents argued, however, that the problem was too urgent to await the outcome of what would inevitably be a difficult and lengthy exercise. We agree, and have decided that our recommendations on the subject should appear in this report.    [Back]

Note 9    The dissenter was Liberty, which argued that the current law is adequate because there is nearly always a human being who is deceived. In our view this is no longer the case.    [Back]

Note 10    The obtaining of a service must however be distinguished from the use of items already obtained. It is not our intention that the offence should be committed by a person who dishonestly listens to an unauthorised recording of music which is subject to copyright, or who makes unauthorised use of computer software. Such conduct is not in itself criminal, and we do not suggest that it should be.    [Back]

Note 11    Depending on the circumstances, the defendant’s conduct in remaining on the boat might itself amount to a representation that he had paid: cf DPP v Ray [1974] AC 370. The line between positive acts and omissions is a fine one.    [Back]

Note 12    See Griew on Theft, para 9-16.    [Back]

Note 13    The draft Bill refers to payment being required for or in respect of the supply of the services. This wording is intended to meet the case where services are provided to those within a limited class of people who pay for the privilege of belonging to that class, rather than paying directly for the services themselves. According to Sir John Smith this case is caught by section 1 of the 1978 Act (Smith on Theft, para 4-87) and our intention is that it should equally be caught by the new offence.    [Back]

Note 14    D might perhaps be said to have obtained an “exemption” from payment within the meaning of section 2(1)(c), but would not commit the offence under section 1.    [Back]

Note 15    Halai [1983] Crim LR 624. Halai has been reversed (by Cooke [1997] Crim LR 436, and the Theft (Amendment) Act 1996) on the question whether the obtaining of a loan can be an obtaining of “services”, but not on the point made in the text.    [Back]

Note 16    It is debatable whether the fraud offence would be committed where by deception D obtains, for nothing, a service which would otherwise have had to be paid for, and which costs the supplier nothing to supply. Arguably it depends whether, had D not been able to get the service for nothing, he or she would have (a) paid for it, or (b) done without it. In the former case there would be an intent to make a gain, by keeping the money that D has; in the latter, arguably not. But it is equally arguable that D has an intent to make a gain even in the latter case, on the basis that the deception makes the difference between getting the service for nothing and having to pay for it. We think it unlikely that many defendants would escape liability as a result of this case not being expressly covered.    [Back]

Note 17    Theft Act 1978, s 4(2)(a).    [Back]