For many fraud victims, getting their money back (or at least some of it) is really important.
There are a number of options that may be available to fraud victims in England and Wales who want to try and recover their losses. The main options are briefly described in this section.
Of course, the likelihood of recovering losses ultimately depends on whether the fraudster has sufficient money or assets to pay - and this is not always the case.
As a fraud victim you can choose to report the matter to Action Fraud (the UK’s national fraud and cybercrime reporting centre) or to the police. This is usually a no (or low) cost option for many fraud victims, particularly individuals and smaller businesses.
Not every case reported to the police will be investigated. A fraud case can be ‘screened out’ for a variety of reasons and at any of a number of different stages.
Diagram 1: Typical path through the criminal justice system for individual and smaller business victims of fraud
- Step 1: victim reports to Action Fraud
- Decision point: record case as information or crime?
- Step 2: Crime report to NFIB
- Decision point: should case be passed to a police force?
- Step 3: case with viable leads referred to appropriate police force
- Decision point: investigate or not?
- Step 4: fully-investigated case passed to CPS
- Decision point: prosecute or not?
- Step 5: case proceeds to prosecution
- Decision point: should victim compensation be requested?
If your case is successfully investigated by the police it will be referred to a prosecuting authority (usually the Crown Prosecution Service) who will decide whether or not to prosecute. If your case is prosecuted you may be asked to give evidence. The CPS has produced a helpful guide for victims and witnesses on going to court.
Prosecutions are heard in either the Magistrates’ Court or the Crown Court. Both have discretionary power to order a convicted defendant to pay compensation to the victim (for personal injury, loss or damage resulting).
The way that criminal fraud is defined, investigated and prosecuted is different in Scotland. Read our factsheet on Fraud in Scotland for more information.
Read our summary of the main differences between the criminal and civil justice systems for more information.
A private prosecution is an alternative to state prosecution that is started by a private individual or organisation that is not the police or CPS.
It can be brought by any person or organisation, but usually limited to high net worth individuals or large corporations who can afford to pay the upfront costs associated with the investigation and prosecution themselves.
Anyone contemplating a private prosecution should seek professional legal advice from a specialist solicitor or barrister. Read our factsheet on private prosecutions for more information.
As a fraud victim you may decide to seek compensation and recover assets by suing the fraudster (the defendant) in the civil courts. Commonly, this will be for breach of contract or the tort of deceit.
Low value frauds, as well as crimes committed by ‘men of straw’(ie, a person of no financial means who is unlikely to be able to meet a claim made against them), are seldom thought worth the effort of pursuit through the civil courts. A good starting point are the insolvency registers for England and Wales, Scotland and Northern Ireland.
A wide range of factors will influence the prospects of recovering your losses:
- whether the money, or the fraudster, is located overseas;
- the total number of claimants;
- the availability of the fraudster’s assets;
- the size of the total loss; and
- the willingness of law enforcement agencies to cooperate and share information with the claimant (particularly when a criminal case has already been pursued).
Many lawsuits result in out-of-court settlements. Those cases that do go to trial are dealt with by the County Court or High Court, where they are allocated to an appropriate ‘track’ according to their value and complexity.
In some cases it may be possible for you to represent yourself in court by acting as a ‘litigant in person’. The Bar Council has produced a helpful guide to representing yourself in court.
More complex cases may require a team of professionals, including solicitors, forensic accountants and fraud investigators. It is important that you choose a professional with the right skills, experience and knowledge to help you. Visit find a fraud professional for more information.
Read our factsheet on civil recovery: a summary of key measures for more information.
Read our summary of the main differences between the criminal and civil justice systems for more information.
It is likely that you will need to pay your own legal fees, investigation costs and out-of-pocket expenses (known as ‘disbursements’). But other funding options are sometimes available.
Solicitors and other professionals
Some professionals will act on a conditional fee basis (commonly ‘no win, no fee’), expecting to be paid only if the case is won, at which point they receive their standard fee plus a percentage as a success fee. You will still have to pay for any disbursements, whatever the outcome.
Some professionals will act on the basis of a ‘damages-based agreement’, where payment of solicitors and barristers fees depends on achieving defined success criteria and based upon a percentage of the sum recovered from the losing party. You will still have to pay for any non-barrister related disbursements, whatever the outcome.
Legal expenses insurance
Some of your legal expenses may be covered by an existing insurance policy (called ‘before the event’ insurance). Otherwise, it may be possible to buy ‘after the event’ insurance, with the premium paid up-front, before proceedings start.
These are sometimes called litigation funders. They may be prepared to underwrite your legal costs on the understanding that they are paid either a percentage of the money recovered, or a multiple of the money they’ve advanced.
In very limited circumstances, legal aid may be available if you cannot afford to pay for legal advice.
Not sure if you are eligible for legal aid? You can check online.
If you are one of a number of victims affected by the same fraud, you might agree to share costs by acting collectively, in a class action.
Fraudsters often have many victims. An investment fraud involving shares or property would be a good example. Losses to any one individual might well be too small to justify a legal case costing more than it could possibly recover – especially if the victim was defrauded by a company that is now insolvent.
But if the same fraud was committed against many victims, then it is possible for them to band together and collectively bring what is known as a group, multi-party or class action.
How does such a group form in the first place? Commonly, the internet can be useful. Groups form when victims investigating their own claim discover others who have suffered a loss in similar circumstances. Victim blogs and forums attract fellow victims, encouraging them to share their stories, and so the group begins to coalesce. (A word of caution: fraudsters do try to infiltrate these forums to attempt to divert victims from pursuing their claims.)
Once a number of victims have come together they can build a fighting fund and instruct lawyers to investigate their claim. If the prospects of success are good, and the fraudsters have assets to which the victims might lay claim, then the group may be able to obtain the support of a third-party organisation willing to fund the litigation in exchange for a share of whatever is recovered. Thus, importantly, losses otherwise unrecoverable by an individual, on grounds of expense, can still be pursued by a group action of this kind.
Credit card provider
If you pay for something using a UK-issued credit card and are defrauded, you might be able to recover your losses from the card provider.
Purchases between £100 and £30,000 made wholly or partially with a credit card are protected by Section 75 of the UK Consumer Credit Act 1974. This makes the card provider and the retailer jointly liable if something goes wrong.
As the cardholder,the most for which you will usually be liable is the first £50 of any unauthorised withdrawals or purchases (unless, for example, you have been grossly negligent such as not keeping your PIN secure).
The UK Cards Association has more information for consumers on the legislation.
It is worth checking your insurance policies to see whether you are insured against fraud, theft and/or dishonesty.
This may be through a stand-alone policy – for example, for card protection (individuals) or employee dishonesty/fidelity (businesses) – or as part of a wider insurance product such as home contents, travel, or legal expenses.
You can sometimes buy insurance after a fraud has taken place. This is called ‘after the event’ insurance. You might need this kind of policy to help fund the costs of civil litigation, asset recovery and/or insolvency. Such policies do not really provide insurance against fraud loss, but against the high cost of trying to recover those losses through legal proceedings of one sort or another.
Financial Services Compensation Scheme
The UK Financial Services Compensation Scheme (FSCS) can pay compensation to consumers if a firm, individual or investment scheme which is authorised and regulated by the Financial Conduct Authority (FCA) or the Prudential Regulation Authority (PRA) is unable (or likely to be unable) to pay a claim against it.
For example, if you invested through a registered firm and it transpires that the advice to invest was a fraudulent misrepresentation and that firm later ceased to trade, then it may be possible to be reimbursed by the FSCS. This has the benefit of avoiding any litigation and of ensuring that compensation is actually paid – a particular issue if a firm goes bust.
The level of compensation you may be eligible to receive will depend upon the nature of your claim. Maximum compensation limits vary according to whether the claim relates to deposits, investments, or insurance.
Not sure whether a firm, individual or investment scheme is regulated? You can check online.
Action taken by regulatory and/or professional body
In some circumstances, it may be possible to be awarded compensation through steps taken by a regulatory or professional body. You should contact the relevant body for more information.
Bankruptcy and insolvency
In certain circumstances, you may be able to recover some, or all, of your losses through bankruptcy (against an individual) or insolvency (against a company) proceedings, but only if the fraudster still has sufficient money or assets against which to make a claim.
Where a fraudster has been ruled personally bankrupt, or made the subject of an insolvency order, you must ‘prove’ as a creditor. This means you must rely entirely on the liquidation/bankruptcy as your route to recompense, and can no longer start (or persist with) any other legal proceedings against the insolvent fraudster. Exceptions to this rule do exist, but they are governed by statutory limits to what can be claimed.
Once an insolvency order is made, you must formally register your claim in writing with the Official Receiver (or the insolvency practitioner acting as trustee or liquidator), enclosing whatever evidence is required. A ’pecking order’ means that secured creditors (such as financial institutions) may have first claim on any assets, often leaving little or nothing for unsecured creditors.
You may be expected to fund insolvency proceedings yourself. In this case, the same civil litigation and asset recovery funding options are available, with the sole exception of legal aid.