Social Security Experience Panels - re-determinations and appeals, fraud and special measures for COVID-19: main report

Alternatives to prosecution for low-value fraud

Participants were consulted on fraud and proposed enhanced fraud powers. They were asked for their own personal understanding of fraud, and their opinion of the definition currently used by Social Security Scotland. Participants were also asked for their opinion on alternatives to prosecution for low value fraud, and what they think should happen if fraud is detected before any money is lost.

Understanding fraud

Participants' understandings of fraud

Participants were asked to describe their own understanding of fraud. There were only small variations between participants' answers, with most participants describing fraud as gaining something—often money—by deception. Some comparisons were made between fraud and theft.

"Fraud means gaining monies by deception, property, or anything—it's basically stealing." (Interview participant)

Most participants emphasised that they felt fraud had to be a deliberate act.

"People who are trying to get money that they are not entitled to is fraud, but it's the intention to deceive." (Interview participant)

Opinion on Social Security Scotland's definition of fraud

Participants were asked about their thoughts on the following definition of fraud used by Social Security Scotland:

• Obtaining assistance by deceit.
• Failing to notify a change of circumstances.
• Causing a failure to notify a change of circumstances.

Some participants felt that the definition offered by Social Security Scotland was clear and aligned with their understanding of fraud. One participant stated that they agreed that a lack of intent is not a sufficient excuse where fraud has been committed (for example, failing to notify of a change in circumstances).

"Not knowing isn't a defence – you're doing something wrong, even though you don't know it. Doing something without intent can still be fraud. People maybe not realising, but that still is fraud: not telling, that their circumstances have changed. I think it encompasses deliberate fraud and non-deliberate, sort of, misleading in the forms." (Interview participant)

Querying or disagreeing with the definition

However, participants questioned the definition for a variety of reasons. Differing understandings of the notion of "intent" was a key theme amongst those querying or disagreeing with the definition, and most participants felt that fraud had to be an intentional act.

Responses illustrated that most participants perceived a grey area between what counts or would be recognised as a "genuine error", and what Social Security Scotland considered to be intentional fraud.

"It's not as simple as one might think. In the information you've just read out, it talks about people do make genuine mistakes, so it's a very fine line between what is a mistake—because people don't always understand what their responsibilities are—and life takes over, and you forget things, as opposed to what is actually intent: intent to deceive, to obtain money by deception, to tell lies, basically!" (Interview participant)

The uncertainty around what would be considered an intentional act of fraud—as opposed to a genuine error—was a particular issue in relation to "failing to notify of a change of circumstances." Some participants were unclear what would constitute a change in circumstances, especially for those with fluctuating conditions.

"[My wife] changed her diagnosis […] and that was a problem because there are extra points or extra money given […] it could have been fraud, because I didn't realise— [I thought her new diagnosis] was the same as [her first diagnosis]: it's not. So, it's actually quite easy to do things like that. It's very difficult to do when you're dealing with a crisis." (Interview participant [some details are redacted for confidentiality])

"When you have a disability, you fluctuate all the time. If you have several conditions, you have several fluctuations. At what point does it change from fluctuations to a change of circumstances?" (Interview participant)

Some participants were also concerned that a failure to notify of a change of circumstances would be defined as a fraudulent act, and worried that even if this was accidental it could be classed in that way.

"[Failing to notify] may not be intentional. You need to add the word intentional in there – I have got stress induced memory loss, I forget things. I put notes down to things and find them six months later. I may have something that's a priority but something else crops up that's just a complete and utter disaster and my mind has to focus on that. It could be that I could potentially forget to inform, accidentally forget to inform you, but it wouldn't be intentional." (Interview participant)

One participant stated that failure to notify of a change of circumstances was specifically not fraud, as they felt it expanded the usual definition of fraud beyond having intent.

"As you've described it, you say a failure to notify of a change of circumstances is fraud. I wouldn't agree with that. And then you qualify that by saying it's only fraud if there's no reasonable excuse. That's entirely inverting—in other words, the person now has to show they did have a reasonable excuse, whereas fraud is normally having the intention. As described, this definition of fraud goes much bigger than I would regard as fraud." (Interview participant)

Others were concerned that if the definition of fraud encompasses acts that can be committed without deliberate intent, there needs to be very clear messaging from Social Security Scotland to ensure that claimants are fully aware.

"See, causing a failure to notify in a change in circumstances, it's not fraud – again is it intentional? If it's going to be used as a definition of fraud that message of you must tell us of a change of circumstances, they need to make sure it's communicated clearly. They have to drive forward that you must tell; any changes in circumstances must be notified. There's got to be not just that on its own, you've got to embellish what you say in there, because it's setting out to criminalise people before they've even started." (Interview participant)

Barriers to notifying of a change of circumstances

Participants were asked what barriers they thought existed which could prevent someone from reporting a change in their circumstances. A variety of barriers were noted, but the most commonly suggested ones related to a significant change in life circumstances. Many participants included positive or neutral events—such as moving home or the birth of a child—together with negative ones: family bereavements, long hospital stays, long-term illness, and the breakdown of marriages or other long-term relationships.

"People get carried away with life, if you've got a couple moving in together, they're not going to be thinking about their benefits. Or you've got those where the relationship has broken down, there may be difficulties where the woman doesn't have the tools there to get in contact with you, relying on a women's refuge or friends and it's not easy for them to do that." (Interview participant)

Some participants noted that their day-to-day life could be particularly complex due to caring responsibilities, which may cause distraction and forgetfulness.

"I am currently caring for three different people, to different extents. I have to say to myself, that I'm working full-time I don't have time to do everything and some things get dropped accidentally. You have to have consideration of the person who should have done the informing, of their situation, you know, were they overwhelmed with life at that time?" (Interview participant)

Others highlighted that some people receiving disability benefits may have difficult personal circumstances where mental and physical health issues could present a barrier through creating chaotic conditions in everyday life.

"Some people may struggle with capacity to understand that they need to [inform of a change in circumstances]. People who are on the edge of a 'chaotic' lifestyle but not tipped over into the realm of having someone acting for them." (Interview participant)

Other participants commented that their conditions, or those of friends/family members, may affect literacy or make it difficult to understand when and why they would need to contact Social Security Scotland about a change in circumstances.

"The letters you get from DWP state quite clearly that you must report – but the first barrier is literacy and understanding. I'm an appointee for my [close relative] with learning difficulties and know she wouldn't understand something like that. She wouldn't understand that she would have to report, say, her health getting better." (Interview participant)

Several participants highlighted that the complexity of forms and the benefits system in general can be a barrier to understanding what a person is required to do when their circumstances change.

"It's very easy to make a mistake, I would definitely say that, because the forms are so complicated it's very easy to make a mistake on the form, and misinterpret something that you've put down, but once somebody said to you and actually explained it to you, you realise 'Oh that's not what I meant.' So, I think there has to be some forgiveness for a person who's made a mistake out of a wee bit of ignorance." (Interview participant)

"The first one is failing to understand what a change of circumstances means…certainly, the DWP system is so fiendishly complicated, and the amount of paperwork is so daunting […] the biggest obstacle, I would have thought, is people not understanding the system." (Interview participant)

Relatedly, several participants noted from previous experiences that it could be difficult to get through to someone to notify of a change in circumstances, or that they would be unsure of which department or benefit agency to contact.

"Trying to get through on the telephone and knowing which department to contact. [My wife and I] are both on different benefits from different benefits offices. There's no one port of call where they can take all the information and put it to the different departments." (Interview participant)

A fear of the consequences to notifying of a change in circumstances was also highlighted as a barrier. Some participants commented that they were fearful that it could lead to a drop in the level of benefits, or a total loss of support.

"I think the fear is that [any change in my condition] will be misinterpreted and lead to a drop in support and then that goes into a vicious circle, in that if you have a drop in support that affects your ability to manage your condition." (Interview participant)

Other participants described negative experiences with the DWP in the past, which had left them afraid to speak about their benefits with anyone from the agency.

"I [was] getting a divorce, [and a payment] went into my bank first, then most of it went to [my ex] but the tax people spotted it and then the DWP gave me a bollocking. The whole experience was very stressful and it's left me even now feeling like I've committed a crime. I can't phone the DWP, I'm scared that I'll get shouted at." (Interview participant)

"I guess fear of contacting Social Security Scotland. A lot of people are still going to have the fear of DWP. Until Social Security Scotland actually proves itself as being better than the DWP that fear is still going to be there." (Interview participant)

Suggestions for reducing barriers

Some participants made suggestions as to how barriers to notifying of a change of circumstances could be reduced. These included providing multiple means of contacting Social Security Scotland when someone has to notify of a change in circumstances; this was related to difficulties that some participants had experienced getting hold of someone by telephone.

"I think you need to offer people lots of ways so that they don't have any barriers. Phone, letter, library, doctors' surgery." (Interview participant)

Another suggestion was to provide support (including advocates) to clients who need it to ensure that they have full understanding of what is required of them, or where situations may cause people to feel worried or stressed about the outcomes. Other participants highlighted that some people may need additional support completing forms or accessing online resources and means of communication.

"There's people who are embarrassed or ashamed that they can't understand these letters. I think that would have to be taken into account." (Interview participant)

Some participants also stated that it was important to ensure that there was clear messaging and consistent deadlines applied to requirements around notifying of a change in circumstances, in order to ensure that there was no confusion.

"You've got to be clear with these things right at the start, timescales, what evidence you need, what is a change of circumstances, so people understand right from the start. You need to be clear – what a change of circumstances means, when it starts, how long it has to go on for." (Interview participant)

"But you can't have different times—two weeks for a change of address, three weeks for a birth and four weeks for something else—you know, I think you've gotta, you have to set a deadline otherwise you're just sending out mixed messages. It has got to be absolutely clear." (Interview participant)

Reasonable excuses for failing to notify of a change in circumstances

Participants were asked what they would consider to be a reasonable excuse where someone has failed to notify Social Security Scotland of a change in circumstances. One participant noted that it was hard to say what was reasonable as in most cases the underlying cause may be forgetfulness.

"Define reasonable. In most cases, where it is a genuine error, it's going to be, 'Sorry, I forgot.'" (Interview participant)

However, the most common reasons suggested as a reasonable excuse for not notifying of a change in circumstances related to the impact of significant life events or crises. These included:

• bereavement
• breakdown of a long-term relationship
• traumatic events, such as being the victim of assault
• forgetfulness or confusion, particularly when caused by a medical condition
• medical reasons, such as a long-term illness or hospitalisation

"Being too ill to actually do it. Being in hospital or something […] Also if you have had a traumatic experience, like assault or bereavement, serious illness with a family member." (Interview participant)

One participant also suggested that there may be different circumstances which affect the length of a delay, relating to individual reactions to adverse life events, and that this should be taken into account when considering how Social Security Scotland responds to any delays.

"There's the person who because of the grief [of a bereavement], just forgets, well that's obviously in my opinion a reasonable excuse. There's also the person who knows that the payment is still coming in, and they really ought not to be having it but because ringing up or contacting would mean having to go over that whole [traumatic event], and it's just too upsetting for them, and that just puts them over the line of criminality, potentially. I would say though that compassion would say that it would be better dealt with just by getting the money back without any taint of criminality or fine." (Interview participant)

Alternatives to prosecution

Participants were asked for their opinions on whether or not Social Security Scotland should have an alternative measure to prosecution available for cases of fraud where only small amounts of money were involved.

Agree

Most participants agreed that there should be an alternative to prosecution available, although with variations in responses. The most common reasons that participants gave for having an alternative available were to avoid stress for the client involved, and to avoid wasting resources such as time and money because of lengthy court processes.

"The courts are too busy to be held up for someone who's accidentally claimed an extra £200." (Interview participant)

Having an alternative to prosecution was often suggested as being more relevant for cases of fraud where only small sums of money were involved. Several participants placed this at around a £500-£1000 limit.

"For anything under £500-£1000 it's not worth taking them to court. For one small issue. But people can't be let off with it, there should be some kind of penalty." (Interview participant)

Other participants suggested that any action needs to take account of peoples' circumstances to avoid pushing people further into poverty, or where hardship and deprivation are driving their actions. Some commented that there is a need to be compassionate when handling cases of fraud, as people on disability benefits are already financially insecure and especially vulnerable to any drop in income. They were concerned that fines or penalties may therefore have a disproportionate impact on people with disabilities.

"I think if it's intentional you deserve to be prosecuted. But what does that serve? It cuts people out of a lot of jobs, so yes, people have to bear the consequences, but if there's an alternative, if you've got a woman who maybe needs extra money for heating or children's clothes, but you've got a damn good reason for doing it, to criminalise her doesn't solve anything. A monetary fine is also going to be, going to put her into hardship, because the benefits which are paid out aren't a great deal." (Interview participant)

This was also another topic where the distinction between "intentional" and "unintentional" was raised. Participants suggested that cases of unintentional fraud—for example, where small sums are claimed accidentally—should not be automatically criminalised, but that intentional fraud should still be prosecuted.

"Yes, I think so, but again it maybe comes down the question of intent as well. If it was clearly a deliberate attempt to defraud the system then that should be a criminal offence I think, unless it was very minor sums. But if it was accidental then that shouldn't be automatically criminalised." (Interview participant)

Suggestions

Participants were asked for suggestions as to what alternatives to prosecution could look like. The following were suggested:

• Unpaid work, such as community service or within a voluntary organisation. Participants suggested this may be more suitable where a monetary fine would be inappropriate (for example, where the person concerned was already experiencing financial hardship).
• A small fine, or fines that operate on a sliding scale dependent on the level of fraud involved.
• Withdrawal of benefits.
• Providing the opportunity for the money to be paid back, with no further action taken.
• Educational courses, similar to those used for some driving offences.

"You know how for some things you can go on a course or something, like driving offences they maybe have driver safety courses or…I don't know if they even do things like this in this country […] as an alternative to prosecution. Something like, this is how the system works, this is where you went wrong or where you may have gone wrong, something like that." (Interview participant)

Disagree

Not all participants agreed that an alternative to prosecution should be available. One felt that replacing prosecution with another measure would not be correct, as the level of proof required for prosecution is higher. This participant felt that this would better protect individuals from punitive measures, particularly for cases of unintentional fraud.

"This one of admin penalties, if you haven't got the powers to do it, then you haven't got the powers to do it. And that's the end of that. I think that's a good thing. The chances of anyone being prosecuted for small-scale fraud, as defined by Social Security Scotland, is pretty slim. If it's a small value, it's a small value. Are you really going to take that to the Sheriff's Court? It's one thing to penalise people for forgetfulness or stupidity, at a very low level—you punish them just for being feckless, in a way—but the word fraud should only be applied when the claimant intended to cheat the public purse." (Interview participant)

Another felt that if Social Security Scotland had the option to fine people or impose penalties, this would place undue pressure on individuals to accept these in order to avoid further punishment, even if the fraud had been unintentional. This participant suggested that there would need to be additional checks and safeguards in place to protect people against the power imbalance that may exist in these situations.

"The only thing I'm worried about is where someone has made a genuine error, but the system isn't sure, and Social Security Scotland suggest that they think the person should pay a fine and the money be recovered, that person might think 'Well I can't risk going to court, I can't afford for that to happen, even though I think I've had a reasonable excuse here, but they're not accepting it.' I just wonder if they will accept the fine because they feel it's the easier thing to do, or because it's the easier thing to do, or they feel pressured to do that, rather than to pursue it to its full conclusion." (Interview participant)

One participant stated that if fraud was intentional, this should always be placed against someone's record, even where this was just for a small sum and did not lead to prosecution, in order to identify patterns of offending or repeat offenders.

"Well, clearly a fine. I'm just a wee bit worried that if it's a deliberate fraud that a fine needs to find some way of being recorded against that person. The fact that you have committed a fraud [for a small sum], not a huge amount but not insignificant, something says to me that ought to go against a person's record […] the reason I say that is, they may have defrauded Social Security Scotland of £1000, if that's not recorded anywhere, if they're also engaged in low-level frauds in several other ways; if that was all recorded that would then perhaps trigger somebody saying 'That needs to be referred to criminal proceedings.'" (Interview participant)

Intent to commit fraud

Participants were asked what they thought should happen in cases where fraud is identified before any money has been claimed, but there is clear intent. They were given the example of an application being submitted using someone else's identity. Most participants agreed that clear cases of intentional fraud, such as those involving identity theft, should lead to prosecution.

"That's obviously a deliberate attempt to defraud, I think something like that should be prosecuted. You don't just accidently make an application using someone else's name. That's kind of clear cut, deliberate." (Interview participant)

One participant suggested that even where intentional fraud is identified, there should be consideration of individual circumstances, for example if the individual involved is experiencing extreme hardship.

"If you've got people who are absolutely destitute and have […] committed a fraud, even though they wouldn't want to do it, they were driven to it, then I think making them pay back by a cash payment, even a couple of quid a week […] it's going to cost more to recover that money in a fine, whereas if you could give that person some work to do they would be of service and they would useful." (Interview participant)

Other comments and suggestions

Participants made some other comments and suggestions outside of the planned interview topics:

• There should be an investigative team with relevant expertise to investigate potential cases of fraud.
• Investigations for fraud should encompass a welfare check to ensure that the claimant is OK.
• Where something identified as fraud is detected, but it is not a clear case of intentional fraud, people should be contacted first to explain what is happening and to see if the issue can be resolved without further action.

"When you're looking at fraud, let the people know you're investigating it, give them a chance to withdraw their claim, but don't stop the benefits. Just tell them that if fraud is proven they will have to pay plus there will be penalties, because they may be totally innocent but you have made their lives worse, and their conditions worse, by stopping the benefits in the first place." (Interview participant)

Some participants noted that the issue of fraud constantly affects them as a benefit claimant due to the stigma and assumptions made about benefit clients. Even when they have done nothing wrong, and that even in cases where they are proved innocent, there can be long-term negative impacts^[4].

"And when I have a good day and I think I might walk to the end of the pavement, instead of using the wheelchair, then you think what if someone sees you and thinks, "Oh, you can walk". Fraud really does affect everybody who's claiming disability, because it makes you feel everyone's watching you, and thinking "I wonder if she really is disabled". How big a problem it is, I don't know, I've no idea…but I think they should know the effect it has on everyone." (Interview participant)

"I was accused of fraud by someone […] They contacted the DWP and they stopped my [family members'] benefits because of this person contacting them. I had to then prove my innocence. So, it was like we were assumed to be liars. Rather than, you said in your statement you assume innocence until proven guilty. They assumed guilty until I proved my innocence. […] But the stress of that, of being accused of being a fraudster, having the benefit stopped straight away. I got into so much debt over that 18 month period that I had to support my [family members] financially, that my mental health went really, really, bad, because I wasn't earning enough to support them financially." (Interview participant)