Blackmail – how serious is the menace?

October 2018  |  PROFESSIONAL INSIGHT  |  FRAUD & CORRUPTION

Financier Worldwide Magazine

October 2018 Issue


Blackmail appears to be becoming a more prevalent threat, taking on ever more diverse forms. Responding to it is a delicate task, with a number of potential pitfalls.

The word blackmail of course has a tabloid resonance. At its most basic, the type of blackmail most people would think of is a demand for cash coupled with a threat to disclose damaging or embarrassing information, which may or may not be true and may or may not end up in a tabloid paper, regardless of whether cash is handed over. Most such cases tend to be opportunistic.

In contrast, corporate blackmail tends to be more organised, with professional hallmarks, and increasingly seen in the context of negotiations and other forms of dispute resolution, which includes litigation.

Now that most individuals and entities have a cyber presence they also have digital assets and vulnerabilities. As with many developments and innovations in our daily lives, they present new and challenging opportunities for criminals, including the ability to target victims remotely, thereby exposing them to a far wider range of threats.

This article examines the latter two forms in more detail, before making some practical suggestions regarding effective response strategies.

The offence

The elements of the offence of blackmail are set out in section 21 of the Theft Act 1968.

A person is guilty of blackmail if, with a view to gain for himself or another or with intent to cause loss to another, he makes any unwarranted demand with menaces. For this purpose, a demand with menaces is unwarranted unless the person making it does so in the belief that he has reasonable grounds for making the demand and that the use of the menaces is a proper means of reinforcing the demand.

The nature of the act or omission demanded is immaterial, and it is also immaterial whether the menaces relate to action to be taken by the person making the demand. Furthermore, a person guilty of blackmail will, upon conviction on indictment, be liable to imprisonment for a term not exceeding 14 years.

Cyber blackmail

Now that everyone who has access to the internet can target anyone else in the world, the risk of exposure to blackmail demands has increased significantly. The threat can come from a much wider pool and can be manufactured with relative ease. Accordingly, as the threat level has increased, so too has the need for sound advice.

The three main strands of cyber blackmail are: (i) personal extortion – usually relating to webcam footage or other online activity, which is often amateurish and sometimes uses standard scripts from internet sites which provide guidance on how to extort; (ii) data breach extortion – the semi-pro level of cyber blackmail, sometimes with fake demands relating to data that is already out there; and (iii) professional cyber extortion, focusing on denial of service targeted at maximum impact – this is the most serious threat for companies with highly sophisticated schemes which can have massive impact.

Blackmail in the content of litigation and disputes

When commercial disputes become antagonistic, parties will often think of ways to put pressure on the other side. The elements of blackmail – making an unlawful demand with menaces, with a view to gain or with intent to cause loss – can apply to clumsily worded settlement negotiations.

A threat to do something the maker of the demand is entitled to do – such as resort to court proceedings – can qualify as menaces; indeed most traditional blackmail involves a threat to do something the blackmailer is entitled to do. A demand can be unwarranted even though the person making it believes that it is a proper claim. As the statute makes clear the offence is made out unless the maker believes that he has reasonable grounds for making the demand and that the use of the menaces is a proper means of reinforcing the demand. So, care is needed to ensure that the demand and the way that it is reinforced are made in good faith (in the sense of a genuine belief on the part of the maker). Taking care means more than typing ‘without prejudice’ at the top of a letter. That does not make any difference if the wording of the letter amounts to a criminal offence.

An effective response strategy

In our experience, the best form of response to these sorts of issues is drawn from one or more of the following. First, get advice on your options if negotiations start looking like demands. If the other side start to overplay their leverage, get help and advice to avoid falling into the same trap. It is not a good idea to say: “your letter amounts to blackmail and unless you now settle our entire counter claim we will report you to the police”.

Second, if you are facing an overt attempt at extortion, get the benefit of a professional assessment of the menace and its seriousness, especially in identifying fake cyber threats. It is bad enough being blackmailed but worse still to be worrying about fake threats.

Third, get help managing the response. For example, if there is no choice but to make a payment ensure it can be made safely and lawfully. From the start, think about the investigation process and of the need to secure and preserve relevant evidence.

Fourth, have or build a team which can also assist with reputation issues and get help with any police reports, particularly in non-traditional examples which the police may not immediately recognise as criminal. There is a victims’ right to review scheme in which some decisions made by the police (and the Crown Prosecution Service (CPS)) may be challenged, but the right is not engaged if the police decline to investigate. In some cases the first hurdle will be persuading the police not to reject the complaint as a ‘civil matter’.

Fifth, if the police are prepared to act make sure they understand the sensitivities and consider powers which the courts can use to protect victims from publicity. Get help with your rights if the police do not respond in the way you would expect them to. If authorities cannot be persuaded to take the matter seriously, consider a private prosecution, where the victim’s rights and interests will be considered from the start.

Finally if you want to consider a private prosecution, do not think of it as a good way to force the other side to capitulate in a civil claim and do not instruct a lawyer who tells you it is. There are a number of benefits to the private prosecution option but it has to be approached responsibly. Abusing the court process is never acceptable and can be a costly mistake.

 

Tim Thompson is a managing associate at Mishcon de Reya LLP. He can be contacted on +44 (0)20 3321 6503 or by email: tim.thompson@mishcon.com.

© Financier Worldwide


BY

Tim Thompson

Mishcon de Reya LLP


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