In part one I detailed what asymmetrical information and fraud were, and I presented a situation in which asymmetrical information would not constitute fraud. The question is, are there any situations in which asymmetrical information does constitute fraud? I believe so, but the truth is it’s most likely extremely difficult to substantiate. Let’s make a case for it anyway.
Selling almost anything used is an example of asymmetric information, and most times it is not a form of fraud, but what if an agent is involved in the selling. What if the agents that represent the buyer and seller work for the same company. Depending on the information that is being conveyed it is possible that there may be a type of fraud happening, especially if the information is used to gain a particular position of bargaining power. The real question is, how do you prove any sort of fraud in this situation. Well, if there is a clear detriment, intent to use the information to the detriment of someone else, and the attempt to conceal, then I would say there is absolutely a case for fraud.
The problem with the above example is actually proving that there was intentional, detrimental, and concealed information that was only available to one party. In most cases, if you have a good enough agent you shouldn’t have to worry about this, but the truth is this probably happens almost every day. Proving fraud is a very onerous task, and in most cases this type of fraud would not hold up, but it is time we start considering information asymmetry as an area for potential fraud risk.
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