David Walters wrote:
The caught outside his zones bit is the key. A paper ticket user
that gets on in zone 1 with a zone 1 only ticket going to an ungated
zone 4 station might get caught by an inspection. A pre-pay user
will be okay if they get stopped and if they don't could "forget"
to touch out to save themselves some money.

and what about someone with a zone 1 season AND some pre-pay on their
oyster?

They can travel to any ungated station outside (if it has a touch-out,
like a DLR station). If an inspector comes outside of zone they just
say they are going out of zone which is allowed as they have some
pre-pay. Then when they get to the other end they just don't touch out.