Distinction between lying and fraud

[Devil's Advocate]

You're wrong, Devil's Ad,

The fact that man is fallible, doesn't mean moral perfection is unatainable.

Accidents and mistakes due to errors or a lack of knowledge aren't immoral. Deliberately doing wrong is.

...

You're welcome to defend your assertion that moral perfection is unattainable because man is fallible, & I'd love to read it.

...

 

Often...

 

Can you point to a particular concrete example of moral perfection?

 

Ignorance of the law is not an excuse, but it is sometimes excusable.  We agree that intent is a measure of morality; specifically choosing to act morally or immorally.

 

As to the last part, I take it as given that fallible action can cannot be perfectly good.

Edited January 7, 2014 by Devil's Advocate

[Devil's Advocate]

...

All are cases of fraud, but should the government step in?

 

A government that secures life and liberty is duty bound to investigate harmful interactions and punish aggressors.  Our government does a lot more than that, but in a free market society, that's all a "monopoly on force" need do;  investigate and punish harmful aggressors.  If the victim of a lie or fraud can persuasively prove harm was done to their life, liberty or pursuit of happiness, then yeah, the government should work to redress the harm.

Edited January 7, 2014 by Devil's Advocate

[thenelli01]

A government that secures life and liberty is duty bound to investigate harmful interactions and punish aggressors.  Our government does a lot more than that, but in a free market society, that's all a "monopoly on force" need do;  investigate and punish harmful aggressors.  If the victim of a lie or fraud can persuasively prove harm was done to thier life, liberty or pursuit of happiness, then yeah, the government should work to redress the harm.

 

Does a victim necessarily have to prove harm was done to their life in Criminal Law? Isn't that implicit in the concept itself (i.e. fraud is harmful by its nature in the context of human interactions)? For example, if someone pushes you, I don't understand how you could prove that your life was "harmed" in any significant way. You had no bruises, no marks, no damage. But, if a cop sees it, or if you report it, he can be charged with assault. I'm wondering what the threshold is in fraud. Why do some cases of fraud get prosecuted (usually involving monetary exchange) and others, such as lying about your marital status to get sex, are not prosecuted as fraud? In the cases I've listed above, for example, it is fraud to lie about a material fact to get someone's affection or time. That is fraud, plain and simple, by every definition of the word, by my understanding at least. Am I context dropping? Do I not understand "fraud"? Why isn't this prosecutable in Criminal Law? 

Edited January 7, 2014 by thenelli01

[whYNOT]

First, can you explain why?

 

Second, sex and love are not objective material values?

 A lot of confusion would be cleared up by definition. ["The Nature of Government" VoS].

"A unilateral breach of contract involves an indirect use of physical force: ...one man receiving the material values, goods or services of another, then refusing to pay for them by force (by mere physical possession), not by right..." "Fraud involves a similarly indirect use of force..." Extortion is another variant..."

 

One has to keep in mind that individual rights are a protection against physical force - body and property. While they are  "...a moral principle defining and sanctioning a man's freedom of action in a social context" and are derived from "man's nature as a rational being", they are not *a morality* per se.

It has been pointed out above that not every immoral act (like the examples of lying and deceit you listed) is contra-rights; conversely, it can happen that not every contra-rights action is immoral.

 

Practically also, how would the sort of emotional and psychological extortion - and their consequences on a victim's consciousness - you listed, be proven, established and punished?

[Devil's Advocate]

Does a victim necessarily have to prove harm was done to their life in Criminal Law? Isn't that implicit in the concept itself (i.e. fraud is harmful by its nature in the context of human interactions)? For example, if someone pushes you, I don't understand how you could prove that your life was "harmed" in any significant way. You had no bruises, no marks, no damage. But, if a cop sees it, or if you report it, he can be charged with assault. I'm wondering what the threshold is in fraud. Why do some cases of fraud get prosecuted (usually involving monetary exchange) and others, such as lying about your marital status to get sex, are not prosecuted as fraud? In the cases I've listed above, for example, it is fraud to lie about a material fact to get someone's affection or time. That is fraud, plain and simple, by every definition of the word, by my understanding at least. Am I context dropping? Do I not understand "fraud"? Why isn't this prosecutable in Criminal Law? 

 

In most cases the law supports what a reasonable person would do under any given circumstance, e.g., don't yell fire if there isn't one.  Objective law requires proof of harm, or at least reckless endangerment, and it's likely that most cases involving lying or fraud would qualify as some form of reckless endangerment.  For example, lying about your marital status to get sex involves fraud (intentional misrepresentation) and endangerment (to your spouse who may get an STD).  Whether or not the act is prosecuted as a crime, the element of endangerment is there.  In doing a little research for this topic, I came across the following:

 

"A fraud is an intentionally false representation made with the intent to mislead the listener, and that the listener relied on 'to her detriment.'"

http://blogs.findlaw.com/injured/2013/01/fraud-vs-lying-whats-the-legal-difference.html

 

It's worth remembering that officers of the law have some leeway in terms of not issuing a ticket when a warning is sufficient to avoid harm.

[whYNOT]

I think it's over-conflation of lying and fraud - lying or being lied to doesn't conflict with individual rights...until or whether that deception breaks a material contract involving goods or services. So you can't "defraud" someone to gain sex or defraud your wife by cheating. These are simply deceit, and lies of commission or maybe omission.

[thenelli01]

So you can't "defraud" someone to gain sex or defraud your wife by cheating. These are simply deceit, and lies of commission or maybe omission.

 

I am mostly in agreement with your post #29. But, I don't agree with this. 

 

Lies of material fact (i.e. facts that the victim acted on) in order to gain sex is fraud. It is essentially rape. The person did not and could not give their consent if the lie was material. Take this example: a woman is adamantly opposed to getting involved with married men. She met a married man, and he assured her that he was single and not married. If she had known that he was married, she would not have slept with him.

 

Similarly, a wife is a monogamist, and would not be involved with someone who cheats on her. Yet, her husband is secretly having an affair on the side, while assuring her that he wasn't cheating on her. If she had known that he was cheating, he wouldn't have continued to stay with him nor have sex with him. 

 

This is opposed to a lie that is immaterial. For example, a man met a woman and asked her how old she was. She claimed she was 25, but was really 27. This lie was probably irrelevant to his decision to sleep with her.

 

From Wiki:

 

Rape is a type of sexual assault usually involving sexual intercourse, which is initiated by one or more persons against another person without that person's consent.

 

How could one give consent if such consent is based on a lie?

Edited January 8, 2014 by thenelli01

[thenelli01]

Similarly, I'll use the example of someone claiming to have cancer to get someone to come over the house (who normally wouldn't have) and spend time with her. 

 

I would call this kidnapping and imprisonment by fraud because it is using (indirect) force through a material lie to transport someone and keep them there without their consent.

 

 

From Wiki:

 

In criminal law, kidnapping is the taking away or transportation of a person against that person's will, usually to hold the person in false imprisonment, a confinement without legal authority.  

 

Disclaimer:  I really wouldn't call this kidnapping in the legal sense, but I am bringing this up so someone can point out the flaw and the reason why this shouldn't be criminally prosecuted.

Edited January 8, 2014 by thenelli01

[softwareNerd]

Disclaimer:  I really wouldn't call this kidnapping in the legal sense, but I am bringing this up so someone can point out the flaw and the reason why this shouldn't be criminally prosecuted.

In my Contract Law 101 class, we were taught that not all agreements were actionable contracts under law.  The usual phrasing is: "all contracts are agreements, but all agreements are not contracts".

 

Some promises and agreements are not intended to be legally enforceable, and both parties understand this, as a matter of ordinary practice. One does not need to bring lies or fraud into it. Suppose I say to someone, "come here and I'll give you a kiss". They come, and I refuse. Can I take them to small claims court and demand $X in compensation? I think that if the context is informal, and if there is an assumption that this is not a legally-enforceable agreement, then it should be treated as such. 

 

I do not know what the razor would be. In contract law, "consideration" is often the key. So, if someone were to say "give me $1 and I'll give you a kiss", and I gave them $1 (the consideration flowing one way), they would either have to kiss me (consideration flowing the other way) or return my $1 (perhaps with something extra for damages)? Conventionally, when money flows in one direction, the law sees is as a legally-recognized consideration, and thus a legally-enforceable agreement (aka a contract). This is why people sometimes take up a job for a payment $1 rather than being totally free: it makes clear that there is a contract and that the person intends to be legally bound by the terms of the agreement. 

 

Anticipating your objection, it is true that there are many types of non-monetary considerations. If the person takes something material (say a ham sandwich), the law will almost certainly consider that as valid consideration. So, one might argue that when I say "come here and I'll giver you a kiss", the "coming here" of the other person is the consideration and it is not for anyone else to question whether this is valid or legal consideration. This is true, yet I think that the real abstract answer that the law is trying to get to -- via its limited concept of consideration -- is whether the parties meant their agreement to be a contract. Contracts can be verbal, they can also be implicit. Nevertheless, I think it is correct that agreements not be enforceable is the parties did not think or did not have reason to think they were enforceable.

 

Charity is ordinarily considered not to be enforceable, because the recipient's condition is not legal consideration. So, if a tramp comes to my sandwich shop and says "I'm penniless, can I have a sandwich", and I give him a sandwich, the law would typically hold it not to be a contract. If a fistful of money falls out of his hand after he has eaten the sandwich, I don't think a court would force him to pay.

[whYNOT]

I am mostly in agreement with your post #29. But, I don't agree with this. 

 

Lies of material fact (i.e. facts that the victim acted on) in order to gain sex is fraud. It is essentially rape. The person did not and could not give their consent if the lie was material. Take this example: a woman is adamantly opposed to getting involved with married men. She met a married man, and he assured her that he was single and not married. If she had known that he was married, she would not have slept with him.

 

Similarly, a wife is a monogamist, and would not be involved with someone who cheats on her. Yet, her husband is secretly having an affair on the side, while assuring her that he wasn't cheating on her. If she had known that he was cheating, he wouldn't have continued to stay with him nor have sex with him. 

 

This is opposed to a lie that is immaterial. For example, a man met a woman and asked her how old she was. She claimed she was 25, but was really 27. This lie was probably irrelevant to his decision to sleep with her.

 

 

How could one give consent if such consent is based on a lie?

I'm mixed up. I'm unsure whether you are invoking individual rights in a rational society, or rights and the Law as it stands presently.

"The recognition of individual rights entails the banishment of physical force from human relationships: basically, rights can be violated only by means of force." [AR]

In such a society, you can't be protected from lies - i.e., any and all deceptions which fall short of "physical force". It's the difference between grabbing hold of a girl against her protests - or contracting to pay her for her services, and not; and, inviting her over to your place assuring her you're single (and you are not) and the best lover in town (?) and you'll take her for dinner later (which you don't intend).

"Essentially rape" this can't be.

[softwareNerd]

In such a society, you can't be protected from lies - i.e., any and all deceptions which fall short of "physical force".

The law will not prosecute any and all deceptions, but it will prosecute some, and this is correct. it is also consistent with Objectivism.

Under good law, each party to a contract has the onus of being skeptical in the spirit of "caveat emptor". However, the law also (correctly) recognizes that some statements and assurances made while agreeing to a contract form the basis of that agreement and if they are lies the other party can sue.

[whYNOT]

Which is only rational and proper. There are usually early stages of a business contract in which all parties act in good faith on verbal agreements alone. If it could be shown that one has intended to deceive from the off (costing others financially, or in their potential earnings) then certainly there could be a case against him for fraud. (Although a less straightforward link, it is "Physical force", I'd think).

thenelli brought in mostly social examples of lying, and those I don't consider fraudulent, legally. "Man's nature as a rational being" includes his volitional consciousness, and this infers voluntarism in his judgments in the face of deceit. Government can't save you from yourself, in short. That's the intent of nanny-Statism.

[Leonid]

Fraud is a species of deception where man's property rights violated by means of lying. Most of transactions are performed in good faith and based on trust since there is often a gap of time between payment and delivery of goods. People also use cheques or letters of credit as means of payment. In both cases there is a pledge to pay or to deliver goods taken on faith. When such a pledge is not honored, the guilty part initiates force against his victims by retaining goods or money. In principle there is no difference between fraud and theft or robbery. However not every lie is initiation of force. In the most of the cases lie is a moral, not legal issue. 

[softwareNerd]

... social examples of lying, and those I don't consider fraudulent, legally.

True. It is not the lying and deception but the context within which it is told.

Key to this is whether the parties intend to be bound by the promises and assurances. In most social contexts, this intent is absent. Also, the default assumptions might sometimes depend on custom -- because it may be customary to consider some types of agreements to be binding. For example, there was a time when a promise to marry someone was considered legally binding, but this is no longer the case. Though it seems quaint now, I think it made sense in a more traditional age to assume that the damage from such a breach was such that the promise would be a contract, and that a breach would result in damages.

[theestevearnold]

"Practically also, how would the sort of emotional and psychological extortion - and their consequences on a victim's consciousness - you listed, be proven, established and punished?"  --WhyNOT (part of post #29)

 

Sorry about my mishandling of the quote function.

 

Great question. It shows how difficult the OP's implications are to solve. I can only answer it in general terms: Experts in civil and criminal law, who understand government's role and adhere to it, will have to define the various types of lies that qualify as an indirect use-of-force, then formulate objective standards for charging/indicting, prosecuting/defending, settling/hearing/trying (training judges and/or juries, rules of evidence etc.), and punishing/rewarding (sentencing guidelines, restitution etc).

 

And since a legal sysem (and lawyers, time-off-work etc.) cost money, filing a false charge/claim is a lie that should have restitution attached to its punishment. That one is often hard to prove, but when determining the losses accrued due to the lie, it's easier to account for than non-monetary lies.  

 

The OP is a question I'd like to see addressed, one day, in a proper legal system.

[Harrison Danneskjold]

Fraud is defined as obtaining a value by deception regarding a material fact.

Lying is intentionally telling a false statement (or statement you believe to be false).

Your original definition is slightly skewed.

To obtain value does not constitute a crime, in and of itself; in any crimes which coincide with the acquisition of value (such as robbery) the value itself is incidental.

 

A crime occurs when one person initiates force against another.  And while force is usually conceived of as violent and bloody, it includes anything which directly interferes with living morally.

 

So fraud is any lie a person tells, which directly prevents another person from acting morally (or within their rights).  The method therein has already been described:

 

Epistemologically, lying is always bad because it creates a breach with reality. . . I don't think I need to explain how a consciousness that benefits from a strict adherance to reality can suffer from the creation of such a breach.

 

Applied to a legal system, someone is a victim of fraud when:

 

1-  They engage or fail to engage in some activity, rationally by the context of their knowledge at that time, but objectively irrational/immoral/detrimental.

2-  This discrepancy between reality and their awareness of it was caused by another person's statement(s).

3-  Said other person possessed knowledge contrary to their explicit statement(s).

 

4-  That 1, 2 and 3 can be objectively proven within a court of law.

Edited March 4, 2014 by Harrison Danneskjold

[thenelli01]

Applied to a legal system, someone is a victim of fraud when:

 

1-  They engage or fail to engage in some activity, rationally by the context of their knowledge at that time, but objectively irrational/immoral/detrimental.

2-  This discrepancy between reality and their awareness of it was caused by another person's statement(s).

3-  Said other person possessed knowledge contrary to their explicit statement(s).

 

4-  That 1, 2 and 3 can be objectively proven within a court of law.

 

What exactly is skewed by my original definition? It is, in essence, saying the same thing you said.

 

"Fraud is defined as obtaining a value by deception regarding a material fact"

 

1 - obtaining a value -- (i.e. getting someone to act without their consent)

2 - a material fact -- (i.e. a fact that the victim relied on to make their decision)

3 - by deception -- (i.e. intention / perpetrator knew it was false)

4 - is implicit in any law

 

So fraud is any lie a person tells, which directly prevents another person from acting morally (or within their rights). 

 

Morally and within their rights aren't the same thing. Which one is it?

 

(I'll give you a hint: -- fraud is a material lie a person tells which a person relied on to make a decision. It is a violation of rights because the fraudster takes a value or property from the victim by consent that was given on a condition that was not satisfied. Therefore, it is the moral equivalence of stealing.)

Edited March 4, 2014 by thenelli01

[Harrison Danneskjold]

What exactly is skewed by my original definition? It is, in essence, saying the same thing you said.

 

"Fraud is defined as obtaining a value by deception regarding a material fact"

So fraud is any lie a person tells, which directly prevents another person from acting morally (or within their rights).

 

These are similar but not interchangeable.

 

Morally and within their rights aren't the same thing. Which one is it?

Rightfully.

 

It is a violation of rights because the fraudster takes a value or property from the victim by consent that was given on a condition that was not satisfied. Therefore, it is the moral equivalence of stealing.)

So if person A fed person B cyanide by explicitly stating that it was food, and gained no value whatsoever from it, you wouldn't consider that fraudulence?

 

Because that is the difference between your definition and mine.

Edited March 5, 2014 by Harrison Danneskjold

[thenelli01]

So if person A fed person B cyanide by explicitly stating that it was food, and gained no value whatsoever from it, you wouldn't consider that fraudulence?

 

Because that is the difference between your definition and mine.

 

Your ability to think and choose whether or not you want to eat the cyanide is a value to you. So someone fraudulently getting you to eat cyanide is taking that value from you.

Edited March 5, 2014 by thenelli01