is fraud immoral?

[dsayers]

I think intentionally defrauding somebody is unsavory and I think most people would ostracize somebody who was known to be an agent of fraud. However, this inquiry is to whether or not fraud is immoral or not?

 

I would argue that it is not because fraud is co-operative; it only takes place with consent on both sides. If one were to claim that fraud was immoral, they would be saying that one party in an exchange is responsible for understanding the exchange, but the other party is not. I find this to be inconsistent and contradictory. I think if a person does not understand an exchange, they should not submit to it.

 

[EDIT]

Later in this thread, a discrepancy as to the definition of fraud arose. To clarify, the question being asked refers to deceit prior to consenting to a trade, not after. To not make good on terms of an agreement after they are agreed upon by both parties is most certainly theft and therefore immoral.

Edited September 21, 2014 by dsayers

[Songbirdo]

Are you coming from the standpoint that what we call "fraud" is just having superior knowledge in a transaction? I think I can see your point of view, especially when it comes to things like pawn stores, that fraud may be unsavory, but not immoral.

 

If someone comes into your shop wishing to sell a broken 22k gold bracelet and asks "Is this worth anything?" the pawn broker can pretty much assume the customer has no idea how much gold is worth or even what 22k really means; in fact, the customer must think the bracelet is worthless because he thinks it's broken which is why he asked a silly question like "Is this worth anything?".

 

The pawn broker offers $20 for the bracelet, the customer is grateful to get $20 for his broken bracelet.

 

Is that defrauding the customer if the real value of the bracelet (the melt value of the gold) is nearly $1,000? I don't think so: the pawn broker just has superior knowledge and it's his job to have that superior knowledge. The customer doesn't know the real value of gold and that is his shortcoming. 

 

If the customer has a working relationship with the pawn broker, the pawn broker would probably feel obligated to give him the best deal he could (I think the average rate is 40% of the melt value?) because he is a valued, repeat customer. But some new customer, off the street with no history or foreseeable future prospect? Hell no.

[labmath2]

I think intentionally defrauding somebody is unsavory and I think most people would ostracize somebody who was known to be an agent of fraud. However, this inquiry is to whether or not fraud is immoral or not?

 

I would argue that it is not because fraud is co-operative; it only takes place with consent on both sides. If one were to claim that fraud was immoral, they would be saying that one party in an exchange is responsible for understanding the exchange, but the other party is not. I find this to be inconsistent and contradictory. I think if a person does not understand an exchange, they should not submit to it.

 

I find it interesting that someone quite well respected on this forum has taken this position. To me fraud is just one of these types of crimes that requires either the victim or others to freely and willingly engage the perpetrator for the crime to occur. There are also things like defamation, misinformation, e.t.c I wonder if you think the same concept applies to these areas as well?

[JamesP]

Let's say I have $4,000 and you want it. You could tell me that you want to borrow it and you'll pay me back in a year. I agree to those terms. A year passes and you haven't paid me back. When I ask for the money, you just silently fade away.

 

There was nothing I misunderstood about that exchange. You were looking to steal money and chose to do it through manipulation and lying. If I had the foreknowledge of your intent to never pay me back, then I may well have chosen differently, but I don't think you can say that I didn't understand the exchange.

[powder]

Isn't fraud stealing, taking someone's property using deception, in the way the James describes above, and isn't stealing immoral, a violation of the NAP?

[Existing Alternatives]

Fraud, in my understanding, is “lying with benefits,” with lying being the main part. Not fully understanding the transaction or not going out of one’s way to explain the transaction is one thing, but deliberately misleading the other side is something completely different.

 

For example, including pages upon pages of fine print into the contract to make it less understandable is not savory (and one should never enter a contract they don’t fully understand). However, stating on the front page in huge font, “YOU WILL GET YOUR MONEY TOMORROW” and having never repay is lying and is fraud.

If someone comes into your shop wishing to sell a broken 22k gold bracelet and asks "Is this worth anything?" the pawn broker can pretty much assume the customer has no idea how much gold is worth or even what 22k really means; in fact, the customer must think the bracelet is worthless because he thinks it's broken which is why he asked a silly question like "Is this worth anything?".

 

The pawn broker offers $20 for the bracelet, the customer is grateful to get $20 for his broken bracelet.

 

Is that defrauding the customer if the real value of the bracelet (the melt value of the gold) is nearly $1,000? I don't think so: the pawn broker just has superior knowledge and it's his job to have that superior knowledge. The customer doesn't know the real value of gold and that is his shortcoming. 

 

The value of anything is subjective. The bracelet is clearly worth less than $20 to the first guy. But it could be worth $1,000s to the broker.

[dsayers]

“YOU WILL GET YOUR MONEY TOMORROW” and having never repay is lying and is fraud.

 

This is theft, not fraud. If you and I enter into a contract, I have voluntarily created an obligation to you. To withhold that obligation is theft. In the pawn broker example above, neither party has any obligation towards the other until $20 for bracelet is agreed upon by both parties.

[Songbirdo]

What do you define as fraud?

[Existing Alternatives]

This is theft, not fraud. If you and I enter into a contract, I have voluntarily created an obligation to you. To withhold that obligation is theft. In the pawn broker example above, neither party has any obligation towards the other until $20 for bracelet is agreed upon by both parties.

 

Fraud is theft by lying. Failure on a contract could be caused by whole slew of reasons.

[ProfessionalTeabagger]

I think intentionally defrauding somebody is unsavory and I think most people would ostracize somebody who was known to be an agent of fraud. However, this inquiry is to whether or not fraud is immoral or not?

 

I would argue that it is not because fraud is co-operative; it only takes place with consent on both sides. If one were to claim that fraud was immoral, they would be saying that one party in an exchange is responsible for understanding the exchange, but the other party is not. I find this to be inconsistent and contradictory. I think if a person does not understand an exchange, they should not submit to it.

Oh come on. They understand the exchange but the fraudster is deliberately deceiving them. That's the difference between fraud and not doing your homework. 

The whole point of fraud is to fool you into believing you understand the transaction when they know you don't. 

Where is this coming from? What prompted you to bring this up?

[dsayers]

Fraud is theft by lying.

 

I pointed out that theft is without consent and that fraud involves consent. Do you find fault with that contrast?

 

What do you define as fraud?

 

In the context of immorality, would you not agree that the definition would have to be a behavior that violates the property rights of others? And that to violate property rights, you would have to make use of the property of others without their consent?

 

The whole point of fraud is to fool you into believing you understand the transaction when they know you don't. 

 

This is saying that the defrauder is responsible for the defrauded's acceptance of their capacity for error, but the defrauded is not. How do you logically arrive at this conclusion? It's internally inconsistent.

[ProfessionalTeabagger]

I pointed out that theft is without consent and that fraud involves consent. Do you find fault with that contrast?

 

 

This is saying that the defrauder is responsible for the defrauded's acceptance of their capacity for error, but the defrauded is not. How do you logically arrive at this conclusion? It's internally inconsistent.

Fraud DOESN'T involve consent. The victim is tricked into thinking they're giving consent for something but it turns out the fraudster was doing something else. 

 

I don't know what "responsible for the defrauded's acceptance of their capacity for error" means.  A fraudster is a thief who uses deception instead of direct force. The is very, very simple. What prompted you to ask this question?

[Tyler Durden]

It's immoral. You're right that there is consent between the two parties at the beginning, but it only becomes fraud when one of the parties deviates from the agreement.

 

The pawn broker example is not an example of fraud. It's just an example of someone who sold a bracelet for less than he could have.

 

An example of fraud would be when I come to your house as a representative for UNICEF and ask for a donation. You, being the kind and generous person that you are, decide to give me 50 bucks. I thank you on behalf of underprivileged children around the world and leave. But I don't bring the money to UNICEF, I just keep it for myself.

 

You voluntarily gave me the money, because we had an agreement, and the agreement was that I would bring your money to UNICEF. You and I both consented to that. And if I had actually done that everything would be fine.

 

But because I didn't keep my end of the deal, I am now a fraudster and you've lost 50 bucks. So basically fraud is just a breach of contract without notifying the other party and without restitution.

[TheAuger]

Fraud is a violation of NAP because it violates property/contract rights (and therefore immoral/unethical). It's certainly NOT cooperative - one side has chosen to violate the preexisting terms of contract with the intent of stealing from the other side of the contract without their cooperation.

[dsayers]

This is theft, not fraud. If you and I enter into a contract, I have voluntarily created an obligation to you. To withhold that obligation is theft. In the pawn broker example above, neither party has any obligation towards the other until $20 for bracelet is agreed upon by both parties.

 

I accept that violation of a contract is theft. I've never understood fraud to describe that. dictionary.com say fraud is "deceit, trickery, sharp practice, or breach of confidence, perpetrated for profit or to gain some unfair or dishonest advantage." This has always been my understanding of the term fraud. Like in the bracelet scenario above, where the broker offers 1/1000 of its value. This could be construed as deceit for profit.

 

So allow me to clarify my question. Is it immoral to deceive somebody for the sake of personal gain? If any of my previous posts in this thread were unclear, please revisit them under this premise.

[TheAuger]

Is it immoral to deceive somebody for the sake of personal gain?

Yes, that's immoral, as I understand your premises.

[labmath2]

Are you coming from the standpoint that what we call "fraud" is just having superior knowledge in a transaction? I think I can see your point of view, especially when it comes to things like pawn stores, that fraud may be unsavory, but not immoral.

 

If someone comes into your shop wishing to sell a broken 22k gold bracelet and asks "Is this worth anything?" the pawn broker can pretty much assume the customer has no idea how much gold is worth or even what 22k really means; in fact, the customer must think the bracelet is worthless because he thinks it's broken which is why he asked a silly question like "Is this worth anything?".

 

The pawn broker offers $20 for the bracelet, the customer is grateful to get $20 for his broken bracelet.

 

I think in most of  the responses to this analogy, people incorrectly assume the owner is asking how much are you willing to pay for the bracelet. In fact, the actual question is What is the bracelet worth? After the sale you could find out the bracelet is worth $1000 by normal standards and you would not have sold your bracelet at that price had you known this fact. Are you allowed to go back and demand the sale be undone since the buyer did not tell you what the bracelet is normally worth, but what he was wiling to pay for it?

[dsayers]

I think that correction resonates my point though. If you have a bracelet and you want to know what it is worth, you would take it to a jeweler or somebody that deals with the melting of precious metals. A pawn broker is in place (in the context of selling things) to get less cash now as opposed to more cash later by way of being more selective with to whom/when you sell. If a potential seller does not understand any of this, that is not the responsibility of others.

 

@TheAuger: Knowing I am of an opposing position, can you logically explain how you arrive at the conclusion that that would be immoral?

[powder]

It's immoral. You're right that there is consent between the two parties at the beginning, but it only becomes fraud when one of the parties deviates from the agreement.

 

The pawn broker example is not an example of fraud. It's just an example of someone who sold a bracelet for less than he could have.

 

An example of fraud would be when I come to your house as a representative for UNICEF and ask for a donation. You, being the kind and generous person that you are, decide to give me 50 bucks. I thank you on behalf of underprivileged children around the world and leave. But I don't bring the money to UNICEF, I just keep it for myself.

 

You voluntarily gave me the money, because we had an agreement, and the agreement was that I would bring your money to UNICEF. You and I both consented to that. And if I had actually done that everything would be fine.

 

But because I didn't keep my end of the deal, I am now a fraudster and you've lost 50 bucks. So basically fraud is just a breach of contract without notifying the other party and without restitution.

 

 

I accept that violation of a contract is theft. I've never understood fraud to describe that. dictionary.com say fraud is "deceit, trickery, sharp practice, or breach of confidence, perpetrated for profit or to gain some unfair or dishonest advantage." This has always been my understanding of the term fraud. Like in the bracelet scenario above, where the broker offers 1/1000 of its value. This could be construed as deceit for profit.

 

So allow me to clarify my question. Is it immoral to deceive somebody for the sake of personal gain? If any of my previous posts in this thread were unclear, please revisit them under this premise.

in tyler's Unicef example above, how is that different from stealing?  property has been taken without informed consent.  

[TheAuger]

@TheAuger: Knowing I am of an opposing position, can you logically explain how you arrive at the conclusion that that would be immoral?

It seems to me that you're construing fraud as merely bad taste (its "unsavory") in your first post. Please correct me if Im wrong. But Im not clear about if you're of an opposing position or not. So...**dsayers, is fraud a violation of property/contract rights as a philosophical principle?**I maintain that fraud is such a violation. Either you maintain and extend property/contract rights as a philosophical principle, or you do not. There really isn't any logic needed, just a clear definition of and adherence to property/contract rights. Are you wanting a logical proof of property/contract rights?

[NigelW]

Definitions courtesy of Google.

 

Defrauding is defined as illegally obtaining money from (someone) by deception.

 

Deceiving is defined as giving an appearance or impression different from the true one; misleading.

 

True is defined as in accordance with fact or reality.

 

Misleading is defined as giving the wrong idea or impression.

 

Impression is defined as an idea, feeling, or opinion about something or someone, especially one formed without conscious thought or on the basis of little evidence.

 

Illegal is defined as contrary to or forbidden by law, especially criminal law.

 

Motive is defined as the cause that moves people to induce a certain action.

[dsayers]

**dsayers, is fraud a violation of property/contract rights as a philosophical principle?**

 

I'm no longer talking about fraud as some people interpret "fraud" as a premise of a contract (prior to consent) and other as a violation of a contract (after consent). I've stated a couple times that I accept that a violation of contract is theft and therefore immoral.

 

Once the discrepancy in the definition of fraud was identified, I attempted to clarify my initial question by specifying that I am referring to prior to consent. As in the pawn broker example. "What is this [$20k] bracelet worth?" "$20." "I accept those terms." Is it immoral to tell somebody that a $20k bracelet is worth $20? My arguments are that it's not because the trade that takes place AFTER the deceit is consensual and that to call it immoral would be to suggest that one party is responsible for understanding the exchange while the other is not, which is internally inconsistent. I would anticipate any claim that this deceit is immoral to refute these points.

 

I apologize if I have at any time failed to communicate my thoughts effectively. I have edited the opening post to hopefully make it easier for newcomers to the conversation to not get sidetracked by my use of the word "fraud."

[Existing Alternatives]

I pointed out that theft is without consent and that fraud involves consent. Do you find fault with that contrast?

 

Fraud is theft. Without theft it would be just lying. It is nothing but a special case of theft. If we contrast the following two examples:

• Someone sticks a gun to your ribs and you hand over your wallet in full consent. You could, however, resist if you possess some super-crazy kung-fu skills.
• Someone lies to you (says, they are from UNICEF) and you hand over your wallet in full consent. You could resist if you are super-crazy smart and can see through their lies.

Both situations result in the assailing party gaining your property. In both cases you make a choice whether to resist or hand over the wallet. The only difference is the weapon used and whether or not you immediately realise that you’ve been robbed.

[powder]

in tyler's Unicef example above, how is that different from stealing?  property has been taken without informed consent.  

 

 

I'm no longer talking about fraud as some people interpret "fraud" as a premise of a contract (prior to consent) and other as a violation of a contract (after consent). I've stated a couple times that I accept that a violation of contract is theft and therefore immoral.

 

Once the discrepancy in the definition of fraud was identified, I attempted to clarify my initial question by specifying that I am referring to prior to consent. As in the pawn broker example. "What is this [$20k] bracelet worth?" "$20." "I accept those terms." Is it immoral to tell somebody that a $20k bracelet is worth $20? My arguments are that it's not because the trade that takes place AFTER the deceit is consensual and that to call it immoral would be to suggest that one party is responsible for understanding the exchange while the other is not, which is internally inconsistent. I would anticipate any claim that this deceit is immoral to refute these points.

 

I apologize if I have at any time failed to communicate my thoughts effectively. I have edited the opening post to hopefully make it easier for newcomers to the conversation to not get sidetracked by my use of the word "fraud."

OK, I get, you are not confused, I am.  Sorry, my bad, I misread and somehow thought that you disagreed with tyler's or Jame's example or that you thought it was somehow in the same category as the pawn broker example.  

 

You are talking about something else here and I don't think most people are on to it.  Are you asking "is it immoral to take advantage of another person's ignorance?"  If so it is a good question.  probably no, I would think.  Nasty enough that it would, and should, hurt your reputation as an person of integrity and you would probably lose a lot of business if you did it enough.  

 

If I know that this model is going to be discontinued and will go on sale for 1/3 of the price next week and sell it to you at full price because you haven't done your homework...  Is this the kind of thing you are talking about?  this is a little different from the pawn broker example but along the same lines in that the person is taking advantage of the uninformed position of the other.  In the case of the pawn broker it is even more obvious that if the seller wanted to know the value of the item they should know that it is better to ask an expert in the field rather than trust a pawn broker.

[dsayers]

Fraud is theft.

 

This is begging the question.

 

• Someone sticks a gun to your ribs and you hand over your wallet in full consent.

 

Where coercion is present, consent cannot be. Your two scenarios are not comparable as one has coercion and the other does not.

 

If a person wishes to donate to X (UNICEF in the example), they can do so. If person Y approaches you and claims to represent X, you can verify this claim and you can choose to deal with X directly instead. If you choose to enter into trade with Y under the impression that they represent X, you are voluntarily risking that the claim is incorrect. It is an illogical conclusion that somebody else is more responsible for your voluntary actions than you are, particularly if the factor in question is a deal breaker. i.e. If I'm buying a car under the stipulation that it runs (meaning I would not buy it if it didn't run), it is incumbent upon me to verify that the car actually turns over than take a seller's word for it. If I bought a car that does not run, I cannot say that somebody else is responsible for this nor that I am not, let alone both simultaneously.

 

@powder: Yes, the discontinued model example is another example of what I mean. And I'm glad the confusion was sorted out

[powder]

I am curious to know the reasons why dsayers is being down voted.  I don't think his question, "is it immoral to deceive someone for the sake of personal gain"  has not been addressed, or have I missed something?...  again.  

 

Are people saying that this is immoral in the same way as theft?  I think taking responsibility for your choices, like relying on a pawn broker to offer you the real value of an item, and the value of a good reputation systems, like ebay, are antidotes to being duped by unscrupulous people, but is that kind of fraud a violation of the NAP?  

[dsayers]

I am curious to know the reasons why dsayers is being down voted.

 

Several months ago, I had the audacity to observe that "gender" encompasses "male" and "female." Several people used the downvote system as an ideological weapon against me for saying so as they were unable to refute my claim. As this included three of the most prominent members on the board, as well as most of the staff, I took my leave for some time. There is one person who has noticed my return and emptied his downvotes for the day a couple times thus far as something of a grudge. You can check my reputation history to see who as there was one individual in particular who was quite vicious in his pushback due to my position in a different thread from that. /drama

 

Suffice it to say that the downvotes you're seeing here isn't actually due to a lack of philosophical integrity.

[powder]

@dsayers, not too familiar with the whole down-voting thing but I just clicked on one of the down-vote tabs on one of your threads by accident - sorry dude.  Don't know how to retract it but be assured I have given you many up-votes since I started here.  

 

still interested to learn why someone would disagree with your position.  any takers?

[square4]

As in the pawn broker example. "What is this [$20k] bracelet worth?" "$20." "I accept those terms." Is it immoral to tell somebody that a $20k bracelet is worth $20? My arguments are that it's not because the trade that takes place AFTER the deceit is consensual and that to call it immoral would be to suggest that one party is responsible for understanding the exchange while the other is not, which is internally inconsistent.

 

Or this paraphrase: "What is this [$20k] bracelet worth [in the market]?" (because the buyer obviously wants to know the market value) "$20"(=a lie) "OK, a deal." There was no real consent, because the consent was conditioned on $20 being its real worth (in the market).

 

Later in this thread, a discrepancy as to the definition of fraud arose. To clarify, the question being asked refers to deceit prior to consenting to a trade, not after. To not make good on terms of an agreement after they are agreed upon by both parties is most certainly theft and therefore immoral.

 

I think the distinction between deceit before or after the trade is arbitrary. Suppose you agree on buying a functioning car, and it turns out to be broken, this could be considered deceit before the trade, because the car was misrepresented, but also deceit after the trade, because the seller failed to supply you with a functioning car, as he promised to do.

 

If I'm buying a car under the stipulation that it runs (meaning I would not buy it if it didn't run), it is incumbent upon me to verify that the car actually turns over than take a seller's word for it. If I bought a car that does not run, I cannot say that somebody else is responsible for this nor that I am not, let alone both simultaneously.

 

If we should verify that a car is really functioning, should we also verify that he actually owns the car and it is not stolen? Do we also have to verify that the money used for payment is real and not counterfeit? The person who has made a statement is responsible for it, and any agreements made afterwards, are implicitly conditioned on those statements being true. What else are we agreeing on? Only on the object (the car), and not on the properties of the object (functioning)? Why the distinction? A little more difficult is the situation when the deceit is not through verbal statements, but through false impressions. The point is to realize that language gets its meaning through what is commonly understood by it. The same is true for impressions. So there is really not a big difference between saying you are part of Unicef, or walking down the street with a big Unicef logo on your clothing. It can equally be deceit and fraud.

[Songbirdo]

Putting the responsibility of the pawn broker's "fraud" back into the hands of the seller of the bracelet:

If he wanted the market value he should have shopped around to find the best price he can find, done some research on the internet, or sold it to a refiner/melt instead. Ignorance is not an excuse, right?

 

Let me take it into the real estate realm for a moment and I'll get back to the car. What do you do when you are looking to buy a house? You INSPECT it. If you are not competent in house inspection, you hire a house inspector. If you don't have the house inspected to find out the foundation is cracked, the roof will need to be re-shingled soon, and the furnace is on it's last leg can you really blame the seller if the buyer buys it anyway? You pay the minimal fee to get the house inspected, find the shortcomings and account for them in the negotiation or decline the purchase. If you don't take these steps you run the risk of getting burned by your ignorance.

 

So with the car, if you aren't competent to judge a car's functionality, get it inspected before you buy it or stick to places of business you can trust to sell you good cars.

 

I think what both sides need to do in their negotiations is what is commonly referred to as "Due Diligence".

[Josh F]

The example you give is not fraud.  If the broker said "gold is only worth $20" then he is engaged in fraud.  If he simply says "I'll give you $20 for the bracelet" and the person agrees, this is a fair trade.  Fraud is "deceit, trickery, sharp practice, or breach of confidence, perpetrated for profit or to gain some unfair or dishonest advantage."

[yagami]

The answer to your question is no. Lying to someone isn't immoral. When you ask someone for a price of a bracelet you never enter into a verbal contract in which either party agrees to be honest. You only agree to the sale at the price given. Lying makes you a jerk but not immoral. 

[shirgall]

The answer to your question is no. Lying to someone isn't immoral. When you ask someone for a price of a bracelet you never enter into a verbal contract in which either party agrees to be honest. You only agree to the sale at the price given. Lying makes you a jerk but not immoral. 

 

I think the immorality enters is when you ask, "is this bracelet silver" and the seller lies and says, "yes". That is fraudulent if the seller knows it's silver-plated tin.

[dsayers]

I think the immorality enters is when you ask, "is this bracelet silver" and the seller lies and says, "yes". That is fraudulent if the seller knows it's silver-plated tin.

 

How is that immoral? How can you logically claim that one party is responsible for understanding the exchange but the other is not? How can you logically claim that if a party enters into an exchange they do not understand, somebody else is more responsible for that than they are?

[shirgall]

How is that immoral? How can you logically claim that one party is responsible for understanding the exchange but the other is not? How can you logically claim that if a party enters into an exchange they do not understand, somebody else is more responsible for that than they are?

 

Let's try universalizing the opposite: It is immoral to misrepresent the value you are exchanging in a trade because if it was the maxim that ALL people MUST misrepresent what they are selling then it would be impossible to make trades.

 

All parties benefit from a fair exchange. Only one party benefits from an unfair exchange. It is unlikely that any party benefits if everyone cheats on an exchange.

The answer to your question is no. Lying to someone isn't immoral. When you ask someone for a price of a bracelet you never enter into a verbal contract in which either party agrees to be honest. You only agree to the sale at the price given. Lying makes you a jerk but not immoral. 

 

As above, lying itself may not be immoral, but lying about the value of an exchange cannot be universalized.