Fraud by false representation happens when someone intentionally provides false information to gain money, goods, or advantage, under the Fraud Act 2006.
Knowing how it works, how to prove it, and what remedies exist helps individuals and businesses respond effectively. Victims should act fast, secure accounts, report the crime, and gather documentation.
Key Takeaways:
- Fraud by false representation is a crime, defined by intentional dishonesty for the perpetrator’s gain
- Common examples in a business setting include vendor impersonation and false expense claims
- Perpetrators can receive fines, imprisonment and role restrictions, and victims should secure their accounts, report the crime and collect evidence
- Businesses can prevent fraud by false representation by completing thorough due diligence, implementing internal controls and using software like Trustpair
What is Fraud by False Representation?
Fraud by false representation is defined as intentional deception or dishonesty for personal gain. It can be perpetrated by individuals or businesses, and is a criminal offense under the Fraud Act of 2006.
Here’s a breakdown of the legal criteria for fraud by false representation:
- Dishonesty: providing false information, whether verbal or written
- Intention: knowingly inaccurate or deceptive information
- Reasoning: performed for personal or business gain
The maximum sentence is 10 years of imprisonment alongside a fine, although final judgements will be dependent on a guilty plea, offences committed and previous convictions.
Example: vendor impersonation
One example of fraud by false representation is when fraudsters impersonate real vendors in order to secure payment.
This can happen in a few ways, but commonly:
- Fraudsters use high-pressure social engineering techniques like phishing on your known vendors to harvest credentials and gain access to their systems
- Then, they achieve business email compromise (BEC), by sending you and email from your vendors system, in the same layout and with the similar language to usual
- The big difference? They request a change of bank details so that the money doesn’t enter the real vendor’s account, but the fraudsters
Vendor fraud impersonation cases can cause huge frustration. Not only are the real suppliers still waiting for payment, meaning firms sometimes have to make a second payment, but often the fraudsters get away with the funds.
In April 2025, national retailer Marks and Spencer admitted to a customer data leak caused by this very scenario: fraudulent misrepresentation.
It was found that the attackers used a third-party IT vendor as a gateway into the attack, and the suspected group behind the attack called Scattered Spider. 81% of Scattered Spider domains impersonated technology vendors and members of the group are yet to appear in the magistrates court, so it’s clear that this MO is a successful one.
Example: false expense claims
Similarly, if employees make expense claims for purchases that they haven’t incurred, they’re committing fraud by false representation. This is one of the most common forms of fraud around the world, largely because it often goes unnoticed. Even worse, the 2024 ACFE report to the nations found that more than half of occupational frauds like this occurred due to a lack of internal controls.
By intentionally submitting a claim for business expenses that they never purchased, employees are satisfying the triple criteria with regard to the criminal offence. The same instance goes for buying personal items and claiming that they have a usage within the business.
What Are the Legal Elements to Prove Fraud by False Representation?
If you’d like to go to court over a fraud by false representation claim, as the person making the claim, you and your solicitor have the obligation to provide the evidence (and you may incur legal costs).
As an employer, you may want to take an employee to tribunal over the subject of a fraudulent pay dispute. But submitting a fraud by false representation claim may require the information to be disclosed at a trial, as the person being accused has the right to a full legal defence.
Known as the burden of proof, you’ll have to support your claim by matching your evidence to the criteria:
- Dishonesty: find evidence that the claim was not true. For example, if an individual inflated their income level on their mortgage application, you’d need open banking or contract data to show otherwise.
- Intention: find evidence that the defendant knew that their claim was untrue and may result in a criminal charge or conviction. This means that if the defendant can explain their belief in fraudulent statements that were made, your case weakens.
- Gain: quantify what has been gained by them, rather than lost by you. Importantly, the value of the gain/loss can impact the overall penalty if the defendant is found guilty.
In a crown court scenario, your information could help the judge determine whether the defendant is innocent or guilty. It could be the difference in prosecution between a custodial sentence or a suspended sentence, depending on factors like offender history (i.e. other offences) and public interest.
What Are the Penalties for Fraud by False Representation?
In the United States, fraud by false representation falls under federal and state fraud statutes – most commonly under wire fraud, mail fraud, or securities and financial fraud provisions. These laws criminalize intentionally making false statements or misrepresentations to obtain money, property, or another benefit.
Penalties depend on the type, scope, and impact of the fraud. Corporate liability can arise if an organization knowingly benefits from or fails to prevent fraudulent activity within its operations. Companies can face substantial fines, restitution orders, and long-term compliance monitoring imposed by regulators such as the Department of Justice (DOJ) or Securities and Exchange Commission (SEC).
What Can You Do If You’ve Been a Victim of Fraud by False Representation?
If you’re a victim of fraud by false representation, here’s what you can do:
1. Secure your accounts
The first step is to prevent any more money from leaving your account, and “kick out” any unauthorised system users.
In these initial stages, it’s unlikely that you’ll have all the answers in terms of how the fraud was committed. So, you may not have the information to revoke certain access privileges or pause individual software subscriptions. However, most enterprise level clients can’t afford to stall their operational efficiency by stopping outgoing payments altogether, not least because it will strain relationships with other suppliers.
Instead, it’s best to apply blanket security measures that will secure the company bank and software accounts in a way that is operationally resilient. For example, multi-factor authentication is a strong way to verify that users with credentials are authorised to access the company systems. Partnering with Trustpair will secure your accounts from a financial perspective, because you can verify the receiving party before each payment is made. It won’t affect your efficiency, ensuring that operational resilience remains unharmed.
2. Contact the appropriate authorities
Once you have plugged the immediate leak, it’s important to contact the relevant authorities as soon as possible. In some industries, such as financial services regulated by the FCA, firms must also notify their clients in the result of a data breach. Even if that client’s data was unaffected, you may be required to contact them.
3. Collect the relevant evidence
When you are ready to conduct an investigation, it’s important to collect evidence that would be legally submissible. Some firms hire independent external auditors, while others conduct the investigation themselves, depending on the level of severity.
Collecting the evidence requires:
- A forensic approach: be sure not to corrupt any data – information integrity is key
- Logic: leave no stone unturned to ensure that all appropriate information is collected
- Data analysis: for example, access logs must not only be collected, but matched to user credentials, shift patterns and behaviour patterns
4. Get legal retribution
Once you can meet the legal burden of proof requirements in a fraud by false representation case, your firm can work with lawyers to go to court, seeking retribution.
5. Take lessons learned into current and future operations
Finally, firms must learn from the circumstances that allowed for successful fraud by false representation and make the appropriate changes.
For example, imagine the fraud occurred through falsified expense claims. Installing new software that requires spending approval, receipt upload, a ‘work relevance’ explanation and closer ongoing accounting would likely prevent such fraud in the future.
How Can Businesses Prevent Fraud by False Representation?
Businesses can prevent fraud by false representation by conducting thorough due diligence, implementing strong internal controls, and installing fraud prevention software like Trustpair.
Due diligence
Due diligence requires thorough vetting of any potential new employees, business partners and third party suppliers. Organisations should cross reference the information they are given against robust external databases to ensure that they are receiving the truth, or reveal any suspicious activity.
Internal controls
Internal controls require firms to gain visibility over systems and processes by implementing access restrictions, segregating duties and putting the four eyes principle into place. Establishing clear policies and procedures makes it easier to follow the accountability trail, and has the added benefit of putting off potential fraudsters, as the risk of being caught out is greater.
Fraud prevention software
Fraud prevention software like Trustpair ultimately protects your bank accounts, even if fraudsters gain access by false representation. By working with data, Trustpair provides real-time third party account verification and automatically blocks outgoing payments if the details don’t match.
Summary of fraud by false representation
Fraud by false representation involves deliberately providing false information for personal or business gain. Common examples include vendor impersonation and false expense claims. Victims should secure accounts, report the incident, gather evidence, and strengthen internal controls or use fraud prevention software like Trustpair to prevent future cases.