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Definition of Fraud

WBrame
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Money Advice, Ipswich Housing Action Group

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I have had a look at old posts and helpfully found a guide to overpayments from 2011 which is not usually in the public domain but this has not answered my query so thought I would post to see what people think.

I have a client who had a fraud interview for DLA in 2013 - after the interview they decided to remove her DLA for quite a few years and she ended up with an Overpayment in excess of £20k.
The client was sent a letter to say that they would not be prosecuting her or taking any further action against her (I saw this letter last year and did not take a copy and now the client cannot find it).

Overpayment was being deducted from her ESA and then later her Pension Credit until client went bankrupt and they stopped deductions. Now that a year has passed they have resumed deductions on the grounds that the OP is fraudulent.

I wrote to ask them to reconsider as client was not prosecuted and did not accept a caution or Adpen and they have replied with a copy of the fraud interview transcript and state that the client has admitted fraud during an interview.

I have read the transcript and no where does the client accept she has done wrong, she was given a life time award many years previously and in the interview says that she thinks she is still entitled due to her condition etc. At one point her brother says to her that if she has done wrong she can just pay the money back.

In the Overpayments guide it says that an Overpayment can be coded as Fraud if ‘the claimant makes an admission after caution of deception or fraud for the purpose of obtaining benefit’

My client has not admitted fraud or deception just that she thought she had a life time award and that as she still uses a stick etc that she did not realise she had to tell them as nothing much had changed.

So does the client have to actually admit fraud in the interview or use similar words or do they just have to assume the client is admitting guilt to be able to code an Overpayment as fraud?

Any help appreciated.

Elliot Kent
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There is a lot going on there and my debt knowledge is a little rusty but I’ll give it a shot. Hopefully someone can put me right if I’m going off track…

There are two contexts in which it will be important for recovery purposes whether a debt can be classed as fraudulent and both offer different definitions of fraud:

-First in the normal course of events, the maximum recovery rate is set with reference to whether a debt is fraudulent; determined by reference to whether the claimant has (a) accepted an AdPen, (b) been convicted of an offence or (c) admitted fraud or dishonesty. The 2013 regs on this topic clarify that for (c) the fraud or dishonesty can only be in respect of UC,JSA or ESA - this doesn’t apply to your client. I think this is what the guidance you are referring to is talking about.

-Second, where any debt is included in a bankruptcy order, it may be recoverable regardless if it is was incurred as a result of fraud at common law. This would include overpayments resulting from benefit fraud. The common law definition of fraud requires misrepresentation motivated by ‘wicked mind’ - i.e.  something much more than negligence or carelessness is needed, there needs to be an active effort to deceive. An admission or conviction is not required - deceit can be inferred from the circumstances.

As to how your client can actually enforce the law; a complaint is one option, Otherwise a civil claim for the deductions already made or judicial review would be options.

Mike Hughes
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Senior welfare rights officer - Salford City Council Welfare Rights Service

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I had something similar to this recently. I posted in another thread about it. IUC some years back after which the client was not prosecuted but was hit with recoverable o/ps x 3 and APs x 3. I requested a copy of the IUC and over 25 pages or more it became apparent the client had no clue what the capital limits were and did no more than concede that they should probably have said something when their capital increased. I initially went for supersessions on the basis of mistake as to material fact i.e. no admission of fraud and not a shred of evidence to suggest it either. I also pointed out numerous breaches of PACE.

DWP came back and said, hilariously, that I couldn’t have an out of time MR. I then went to some lengths to explain yet again their own legislation to them and to suggest that perhaps they didn’t want this going to an appeal hearing at which they would be roundly embarrassed and they probably didn’t want the PACE complaint either. They then come back with two “in-time” MR decisions which are the same decision but with entirely different explanations.

A formal complaint is then lodged highlighting the sheer incompetence of the above. Long and short of what turned out to be two years out of my life was that all 3 o/ps and APs have been repaid. Now for the fun bits…

Jon (CANY)
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Welfare benefits - Craven CAB, North Yorkshire

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Elliot Kent - 28 May 2016 01:06 PM

As to how your client can actually enforce the law; a complaint is one option, Otherwise a civil claim for the deductions already made or judicial review would be options.

They might also try asking the Official Receiver to intervene.

The OR’s guidance on fraud debts is at:

https://www.insolvencydirect.bis.gov.uk/technicalmanual/Ch37-48/chapter40/part8/part8.htm#40.178