Originally published in Solicitors Journal, 9 September 2008
Internet websites providing 'novelty' documents may seem harmless but solicitors must be aware of their potential use in criminal activity, says David McCluskey
Identity fraud is hardly new; after all, Zeus seduced Leda, Queen of Sparta, in the guise of a swan. Our culture is littered with assumed identities; scarcely a Shakespearean character could get his lines out without changing his name or his gender, and Tony Curtis famously adopted not one but two different personas in his attempt to woo Marilyn Monroe's Sugar Kane in Some Like it Hot. Let us not forget the wolf in Little Red Riding Hood, or Edward Fox's performance in Day of the Jackal, where the would-be assassin assumes the identity of a dead child and applies for a passport in his name – giving rise to the phrase 'Jackal Fraud'.
Home Office guidelines published in 2006 estimated the cost to the UK economy caused by identity fraud at £1.7 billion, an annual increase of £400m based on 2002 estimates. Identity fraud is clearly a significant cause for concern for UK business, and all commercial organisations are potentially at risk, including solicitors' firms that rely upon proof of identity documents for money laundering purposes before taking on new clients. The identification documents requested by solicitors are usually a passport and utility bill and the veracity of these documents is rarely checked.
'Novelty' document websites
There are a number of websites offering for sale packages of fake or 'novelty' ID documents. Commonly these include editable templates of bank statements, utility bills, payslips and P60s.
Such websites generally rely upon a proviso in their terms and conditions whereby the consumer signs an agreement that all documents on the site are for 'novelty and fun purposes only', and are not to be used for fraud, deception or any other criminal activity. The website disclaims any liability should the customer then commit fraud with the purchased documents (see for example: http://www.replicadoc.co.uk/terms.html).
However it is questionable whether, under recent fraud legislation, the liability of such websites really does end there, particularly where the nature of the customer belies a purpose other than mere 'novelty'.
Is the conduct of such websites covered under fraud legislation?
Firstly, it is important to remind ourselves that it has never been possible to exclude criminal liability by agreement. Fake or novelty websites that attempted to exclude their own criminal liability by requiring customers to sign terms and conditions could arguably not have relied upon this waiver under either old or new authority.
However, prior to the introduction of recent fraud legislation (in force from 2006 onwards) it might have been difficult to classify the conduct of such websites, offering fake or novelty documents for sale, as amounting to a criminal offence of itself.
Section 5(2) of the Forgery and Counterfeiting Act 1981 makes it an offence for a person to have in his custody or under his control, without lawful authority or excuse, an instrument which he knows or believes to be false. However, this section only applies to specified instruments which are valuable of themselves, such as money orders, postal orders, share certificates and travellers cheques, rather than focusing upon the potential uses to which documents may be put. While the type of documents generally offered for sale by novelty document websites (utility bill, P60, bank statements) may facilitate substantial gain if used for fraudulent purposes, of themselves they are valueless and may not be encompassed under this statute.
The common law offence of conspiracy to defraud would have been available to prosecutors seeking to prosecute fake or novelty document websites, but would have required proof of a dishonest agreement to expose a proposed victim to some form of economic risk or disadvantage to which he would not otherwise have been exposed.
Identity Cards Act 2006
Section 25(5) of the Identity Cards Act 2006 makes it an offence to for a person to have in his possession, without reasonable excuse, an identity document that is false. However, under s.26 the definition of an identity document is restricted to ID cards, immigration documents, passports and driving licences. It does not cover all the documents that might be relied on by lawyers to verify a person's identity.
Fraud Act 2006
Section 7 of the Fraud Act 2006 (in force on 15 January 2007) makes it an offence to make, adapt, supply or offer to supply any article:
- knowing that it is designed or adapted for use in the course of or in connection with fraud or;
- intending it to be used to commit or assist in the commission of fraud.
The definition of 'article' is given a wide meaning by virtue of s.8 of the FA 2006 and "includes any program or data held in electronic form". The Explanatory Notes indicate that it was Parliament's intention when passing s.7 to encompass within "electronic programs or data" computer templates which can be used to produce blank utility bills.
A defendant prosecuted under s.7 of the FA 2006 will presumably rely on the defence of lack of knowledge or intent.
Establishing intent, either direct or oblique (that is the defendant saw the event as a virtual certainty) under s.7(1)(b) of the FA 2006 may prove too high a hurdle for a prosecution. The terminology requires a nexus between the offer for supply of the document and, at the very least, the defendant foreseeing as virtually certain that the document would be used in a specific fraud. Further, according to Professor David Ormerod in CLR 2007 at 213, intention under s.7(1)(b) is arguably a narrower form of the offence because "assisting in the commission of fraud" is narrower than "for use in the course of, or in connection with, fraud", the latter encompassing articles used only preparatory to the commission of the fraud or after the commission of the fraud.
Therefore any prosecution brought against fake or novelty ID websites is likely to be brought under s.7(1)(a) of the FA 2006 where mens rea would be easier to prove. Here, the defendant is likely to rely on the defence that they had no knowledge that the article being offered for sale was designed or adapted for connection with a fraud, and is likely to rely upon any proviso contained in the terms and conditions of such websites that the documents are offered for novelty purposes only. The success of such a defence will depend on whether the jury consider there is any other legitimate purpose to which such documents could be put.
One such purpose might be use by customers as 'replacement documents'. One website which advertises such 'replacement documents' offers an inconsistent message on its homepage, on the one hand relying on the usual proviso that such products are to be used for 'theatrical, educational or novelty purposes' only and on the other hand claiming that in a disposable age where few of us keep paper copies of invoices, bank statements and utility bills, these documents will verify 'identity, address or income' and are prepared to the 'highest specification'.
It is an open question whether a 'replacement' document is nonetheless a false one, even if it exactly reflects the original in every respect (which is unlikely) and indeed whether a person who uses such a document in his own name for otherwise legitimate purposes (for example to open a bank account in his own name) is nonetheless committing fraud. However, where a website provider commercially offers for sale packages of identification documents that are then sold to repeat clients on behalf of different named individuals, the question then arises as to what purpose or intention such repeat clients could have in purchasing these documents. This would surely reflect on the mens rea of the person selling the documents.
Jurisdiction hurdle
The real hurdle in mounting a prosecution against fake or novelty document websites under s.7 of the FA 2006 will be one of location, as many fake or novelty websites will not be based in the UK.
Section 2 of the Criminal Justice Act 1993 (CJA 1993) provides the courts with jurisdiction over fraud offences "if any of the events which are relevant events in relation to the offence occurred in England and Wales". A 'relevant event' is defined as "any act or omission or other event, proof of which is required for conviction of the offence".
Section 4 of the CJA 1993 interprets 'relevant event' as a communication sent from abroad to the UK.
In order for the courts to have jurisdiction over a prosecution brought against any false identification website based abroad, the 'offer for sale' of the fake document must be interpreted as being a communication sent from abroad to the UK. This is a logical interpretation given that the website makes itself available for access within the UK, can be viewed via UK internet servers and the UK is where the consumer views the offer for supply of these documents.
However, the real complication facing a prosecution of fake or novelty websites based abroad will be the practical problems that arise from investigating a company based in a foreign jurisdiction.
A mutual legal assistance request would be required between the UK and the territory concerned to obtain evidence and request the extradition of individuals concerned. The efficacy of such a request would be dependent upon whether the territory concerned was one of the UK's extradition partners and, if not, would be dependent upon the existence of ad hoc arrangements between the two states.
Serious Crime Act 2007
Finally, s.44 and s.45 of the Serious Crime Act 2007 make it an offence to encourage or assist the commission of an offence if an individual:
- intends to encourage or assist its commission (s.44) or;
- believes that the offence will be committed and that his act will encourage or assist its commission (s.45).
An offence under s.6 of the Fraud Act 2006 (possession of articles for use in the course or in connection with any fraud) is deemed to be a serious offence for the purposes of the SCA 2007 (Schedule 1, Part 1, s.7(2)).
Proving the actus reus and mens rea of such an offence is likely to follow a route similar to s.7 of FA 2006. Intent perhaps being too high a hurdle, successful prosecution is more likely under s.45 of the SCA 2007.
The courts would face fewer jurisdictional obstacles in respect of a prosecution under s.44 or s.45.
Section 52(1) of the SCA 2007 provides that if an individual knows or believes that what he anticipates might take place wholly or partly in England or Wales, he may be guilty of an offence under s.44 or s.45 no matter where he was at any relevant time.
Neither s.44 nor s.45 of the SCA 2007 are yet in force, however even when they are implemented any prosecution of fake or novelty identification websites brought under these sections is likely to face similar practical difficulties as that under s.7 of the FA 2006.
Many such websites will be based offshore and consequently a prosecution would rely upon the assistance of foreign jurisdictions in order to obtain both personnel and sufficient evidence.
Little reported action
Despite the new legislation, there has been little reported action against novelty document websites. Internet reports suggest that the Metropolitan police launched an investigation into such websites in the summer of 2007. However, many such websites are still active and available on the internet.
The website Mortgage Strategy reports one Metropolitan detective as commenting that websites providing false bank statements and payslips would be difficult to shut down if they operated from overseas (www.mortgagestrategy.co.uk/cgi-bin/item.cgi?id=157176&d=pndpr&h=pnhpr).
David McCluskey is a partner at Peters & Peters. The author is grateful to Jo Dimmock, associate, for her assistance in researching and writing this article.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
