Remarketing businesses may be vulnerable to a new anti-fraud law that came into force on 1 September 2025, warns the Vehicle Remarketing Association.
The Economic Crime and Corporate Transparency Act (ECCTA) creates a new corporate offence of “failure to prevent fraud” that heralds a shift in the UK’s fight against economic crime, said VRA legal counsel Jon Butler, a partner at Geldards.
“Despite existing UK fraud laws, prosecutors have struggled to affix criminal liability on corporations when misconduct stems from mid or lower-level employees.
“The new offence is an attempt to change that situation, imposing strict liability on large bodies, corporates and partnerships that fail to prevent fraud by an ‘associated person.’ These include employees at all levels and subsidiaries and their employees, as well as agents, intermediaries, contractors, consultants, and temporary staff.
“Anyone who performs services for or on behalf of your organisation can trigger liability if they commit a base fraud offence and businesses may also be liable where an associated person commits fraud intending to benefit a client of your organisation. Importantly, this is a strict liability offence so ignorance is not a defence.”
Penalties under ECCTA can include unlimited fines for the organisation; a criminal record; reputational damage, civil lawsuits from shareholders, clients or competitors claiming negligence; and regulatory scrutiny and sanctions.
The underpinning offences include fraud by false representation, fraud by abuse of position, false statement by a company director, false accounting and cheating the public revenue. This means any financial misstatement, manipulation, or omission by an associated person can expose a business to criminal liability unless robust prevention measures are in place.
Jon said: “Remarketing businesses with fragmented operations or decentralized staff could be especially vulnerable to ECCTA because it may be challenging to demonstrate compliance.
“An organisation avoids liability if it can prove it had in place reasonable prevention procedures for the circumstances, or if it was not reasonable to expect them to have prevention procedures in place.
“This is quite wide ranging and remarketing businesses handling high volume transactions with multiple intermediaries such as dealerships, fleet operators, auction houses, brokers and agents all represent potential points of weakness.
“Each of these parties can qualify as an associated person and fraudulent activity by any employee, agent, or contractor – even at a lower level – could trigger corporate liability if your firm benefits. For example, by misreporting odometer readings to increase sale prices, falsifying vehicle history or condition reports, or misrepresenting outstanding finance or legal encumbrances.
“Importantly, the law still applies even if senior management is unaware, unless reasonable fraud prevention procedures are demonstrably in place.”
Third-party contractors such as logistics, inspections or valuation reports, temporary staff, and consultants would also be considered associated persons, Jon added.
“Any fraudulent activity they commit could expose the firm if procedures are not sufficiently robust and ECCTA extends liability to cases where the fraud benefits a client of the organisation. In remarketing, that could be if fraudulent overvaluation or misrepresentation benefits a seller or buyer, or if employees or intermediaries manipulate pricing, paperwork or auction data for the advantage of certain clients.”
Jon said remarketing businesses should seek expert advice to ensure they have measures in place sufficient to mount a compliance defence under the new law.
“The Home Office guidance outlines six flexible, risk-based principles – top-level commitment, risk assessment, proportionate risk-based prevention procedures, due diligence, communication and training, and monitoring and review.
“We’ll be providing general guidance through the VRA but specific requirements will vary from business to business, so there is a need to take advice in order to fully understand how ECCTA will apply to your organisation.”
