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Why Antifraud Regulations Are Statist

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alsdjfalsdjfos Posted: Wed, Aug 29 2012 7:16 PM

It's clear to me, at least, that victimless crime laws are illegitimate. For example, DUI laws are illegitimate. You aren't directly physically coercing someone when you drive under the influence. You just increase the probability that it will be the case.

In the same vein, there's nothing illegitimate about using someone else's identity to commit fraud. The only law of the land in a truly free society is protection of property, and when someone commits fraud, they aren't stealing their identity since those people would still have it. It's just that you use it to commit fraud.

Please note that I'm referring to identity fraud, not to credit card or other fraud which steals something. You can register a fraudulent company with somebody else's identity without the other person loosing anything.

You can copy information without stealing it. Copying is not stealing. For example, many offshore banks have an online registration option which only require a photo of your passport and driving license. There is nothing wrong with impersonating another individual as long as personal property is not violated.

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You basically just said, "anything goes, as long as it doesn't involve aggression or violation of property rights."  I'm not sure you'll get much of an argument here.

 

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Fraud should be legal. Many of my so called "libertarian" friends disagree. They don't seem to realize that impersonating someone to set up a bank account or life insurance claim in someone else's name does not violate the property rights of anyone and is both a moral and legitimate action.

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alsdjfalsdjfos:
Fraud should be legal. Many of my so called "libertarian" friends disagree.

Well, there I have to go with your "libertarian" friends.  If you put some water in a bottle and advertise that it's from a glacier in Alaska, and I buy it from you, and then find out you got it out of your faucet, I should have legal recourse.  Not only to reclaim my stolen property but to punish you for your fraudulent act.

 

They don't seem to realize that impersonating someone to set up a bank account or life insurance claim in someone else's name does not violate the property rights of anyone and is both a moral and legitimate action.

You don't seem to realize that those things affect your credit score, which affects your property.

 

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Not only to reclaim my stolen property but to punish you for your fraudulent act.

When was property stolen in your example? You purchased the bottle voluntarily and unless the buyer somehow takes it back without your permission, there is no theft occuring. You don't have an entitlement to punish people for "fradulent acts", and if you did, who would do this "punishing"? What institution would exist in a free society to enforce these antifraud laws you propose?

You don't seem to realize that those things affect your credit score, which affects your property.

I realize there are a lot of things which, as you put it, "affect your property". That's not a reason to deprive individuals of their right to commit fraud.

What you said could be taken to undermine freedom of speech. If someone says anything bad about another individual's credit, this should be, according to your logic, illegal, because it "affects their property" by whatever meaning you attach to that phrase.

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dude6935 replied on Wed, Aug 29 2012 8:33 PM

You need to separate fraud from identity theft. Fraud is generally wrong, and indentitiy theft is only wrong if it causes harm. Effecting a credit score might not rise to the level of harm. But other acts of identity theft would, like commiting murder in my name.

Edit: I guess fraud is always wrong, depending on your definition.

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Malachi replied on Wed, Aug 29 2012 8:39 PM
I just want to point out that fraud could be murder if you sold/gave someone a bottle that had some poison in it and told them it was koolaid, implying it was pure koolaid.
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Fraud is generally wrong, and indentitiy theft is only wrong if it causes harm.

This is an arbitrary, statist determination. In a free society individuals have the right to property, not entitlements to violate other's property rights as punishment for "causing harm".

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Malachi replied on Wed, Aug 29 2012 8:57 PM
Now youre trolling yourself
In a free society individuals have the right to property, not entitlements to violate other's property rights as punishment for "causing harm".
in a free society there are consequences to aggression, including acts like depriving one of property through fraud. Dont piss on me and tell me its raining, kthxbye
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So, just to be clear, in a free society, you don't think one has a right to defend hisself or his property from harm? One has no right to have his stolen property returned? If so, I think the anarchy you speak of is really more of a society with no set of norms or customs at all, which it would be likely that in such a society, no one would respect the "rights" of anyone, property or otherwise. This, of course, would make a market much less likely to develop, meaning no capitalism, no division of labor, and essentially no trade. Every man would live off of what he could produce himself, or plunder from others. That is not anarcho-capitalism.

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in a free society there are consequences to aggression, including acts like depriving one of property through fraud. Dont piss on me and tell me its raining, kthxbye

Where is anyone depriving another person of property when they set up a bank account in someone else's name? You keep asserting this is happening.

So, just to be clear, in a free society, you don't think one has a right to defend hisself or his property from harm?

A free society allows people to defend their property from physical damage and intrusion. This is not what you mean by "harm".

Treating "harm to property" as some abstraction involving credit scores and other indirect effects of other people's actions is a slippery slope. When someone opens a fradulent bank account, they are not "harming someone's property", they are "harming someone's credit score (according to JJ)". No property is being directly harmed. Even if it was, there is no way in which a credit score or bank account might "harm" property, by the vague, undefined meaning you attach to that term.

It might harm a person, but then you are trying to justifying an entitlement based on the "harm" caused to another person.

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alsdjfalsdjfos:
When was property stolen in your example? You purchased the bottle voluntarily and unless the buyer somehow takes it back without your permission, there is no theft occuring.

I purchased a bottle of water that the seller maintained was from a glacier in Alaska.  It in fact was something different.  I did not get what I was paying for.  I paid my money for one thing, and was given something else.  He has stolen my money by defrauding me.  I transferred title to my property to him under the understanding that he was transferring title to me of glacier water from a specific region.  He did not hold up on his end of the bargain.  He has stolen my money.

He still owes me either the glacier water I paid for, or my money back (plus redress).

Fraud has no place in voluntary transactions.

See:

Property Rights and the Theory of Contracts

The Problem with “Fraud”: Fraud, Threat, and Contract Breach as Types of Aggression

 

You don't have an entitlement to punish people for "fradulent acts", and if you did, who would do this "punishing"? What institution would exist in a free society to enforce these antifraud laws you propose?

Yes you do.  And (probably) private agencies would exist to enforce these laws.  (The same ones who enforce pretty much all of the laws in such a society.  I'm curious how you think any laws would get inforced in a free society.)

See:

Fraud, Restitution, and Retaliation: The Libertarian Approach

Punishment and Proportionality

 

That's not a reason to deprive individuals of their right to commit fraud.

I suppose it all comes down to how you define "fraud", (of course, some people find this defining of terms useless and unnecessary, but still).  But by the "libertarian definition", there is no such thing as a "right to commit fraud".

 

What you said could be taken to undermine freedom of speech. If someone says anything bad about another individual's credit, this should be, according to your logic, illegal, because it "affects their property" by whatever meaning you attach to that phrase.

Sorry, I should have been more specific.  If you make an insurance claim as someone else, you're obviously taking property that is owed to someone else.  I would assume that would be clearly recognized as theft.  But even making a bank account using someone else's information...there are costs involved with this.  You are footing this person with the bill, effectively stealing from him.  But even if you somehow pay the costs directly involved in what actions you take while impersonating someone else, there are still going to be indirect costs and future costs.  I'm not sure one could possibly impersonate someone else to open a bank account, and never end up having the person get stuck with any bills or fines or any other costs.

I suppose if you could somehow accomplish that, and you never deprived them of any property, then I suppose there would be no harm done...but then I'm not exactly sure why anyone would go through the trouble of committing the fraud in the first place.

 

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I purchased a bottle of water that the seller maintained was from a glacier in Alaska.  It in fact was something different.  I did not get what I was paying for.  I paid my money for one thing, and was given something else.  He has stolen my money by defrauding me.  I transferred title to my property to him under the understanding that he was transferring title to me of glacier water from a specific region.  He did not hold up on his end of the bargain.  He has stolen my money.

This type of reasoning could be used to justify the Food and Drug Act and truth in labeling regulations. These laws are illegitimate, because value is subjective. You are not entitled to know the production process any given product or hold it against the manufacturer, either. The seller did not "steal" your money any more than you "stole" a different product than what was paid for.

Fraud has no place in voluntary transactions.

Yet the entire transaction was voluntary, and only became a coercive entitlement when the buyer changed his mind and declared that the product he purchased "was something different" than what he actually bought.

Yes you do.  And (probably) private agencies would exist to enforce these laws.  (The same ones who enforce pretty much all of the laws in such a society.  I'm curious how you think any laws would get inforced in a free society.)

I am not going to pick any one system, but free association and non coercive agreements are the only basis for a free law system.

You are footing this person with the bill, effectively stealing from him.

Notice the "effectively". This is not theft as the person can stop payment and cancel the account at any time. They can only pay if they consent.

In the insurance example, the fraudulent person may not have the right to use the actual car, but there is nothing illegitimate about them registering the insurance and collecting any payments as long as the fraud performer owns the insurance policy (which is a contract between the fraudster and the insurance company, and third parties like the car owner have no entitlement to this contract).

but then I'm not exactly sure why anyone would go through the trouble of committing the fraud in the first place.

The right to fraud is a legitimate exercise of the right to present oneself as another person. There is certainly no aggression taking place when an individual prints a counterfeit banknote, club membership card, or so forth; who is having their property physically destroyed or physically removed? Remember that intellectual property is illegitimate; one cannot merely say that the banknote is "copyrighted" in a certain way.

 

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cporter replied on Thu, Aug 30 2012 1:14 AM

 

alsdjfalsdjfos:
This type of reasoning could be used to justify the Food and Drug Act and truth in labeling regulations. These laws are illegitimate, because value is subjective. You are not entitled to know the production process any given product or hold it against the manufacturer, either. The seller did not "steal" your money any more than you "stole" a different product than what was paid for.
 
No, it couldn't. Demanding restitution after being defrauded is not the same thing as using violence to preemptively lower the potential for fraud. You are correct, you are not entitled to know production processes or whatever, however if you enter into an exchange contract with another party where you trade X for Y, and they give you Z, then there are damages. If you disagree with that basic premise then there isn't much more to the coversation.
 
Also, those laws (or fraud in general) have nothing to do with value being subjective.
 
alsdjfalsdjfos:
The right to fraud is a legitimate exercise of the right to present oneself as another person. There is certainly no aggression taking place when an individual prints a counterfeit banknote, club membership card, or so forth; who is having their property physically destroyed or physically removed? Remember that intellectual property is illegitimate; one cannot merely say that the banknote is "copyrighted" in a certain way.
 
Again you are making invalid equivalences. Presenting yourself using whatever name you please is not the same thing as fraud.
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No, it couldn't. Demanding restitution after being defrauded is not the same thing as using violence to preemptively lower the potential for fraud.

It still requires violence or force.

You are correct, you are not entitled to know production processes or whatever, however if you enter into an exchange contract with another party where you trade X for Y, and they give you Z, then there are damages. If you disagree with that basic premise then there isn't much more to the coversation.

That isn't a basic premise of the non aggression principle.

Again you are making invalid equivalences. Presenting yourself using whatever name you please is not the same thing as fraud.

If you present yourself as someone else's name and identity, that is fraud.

 

 

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excel replied on Thu, Aug 30 2012 7:34 AM

It still requires violence or force.

Go on? Defending yourself from a violent aggressor requires violence and force as well.

That isn't a basic premise of the non aggression principle.

Neither is walking down a set of stairs. Therefore stairs are statist.

If you present yourself as someone else's name and identity, that is fraud.

Your are making a false equivalence between name and identity, specifically how these are used interchangably in terms of identifying someone. 

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Go on? Defending yourself from a violent aggressor requires violence and force as well.

But fraud does not involve physically damaging property whereas assault does.

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excel replied on Thu, Aug 30 2012 8:45 AM

But fraud does not involve physically damaging property whereas assault does.

But technically, protection from theft would. Even non-violent theft.

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There is no "theft" taking place during fraud any more than music piracy is "theft" of "intellectual property". "Identity theft" is a frequently used justification for statist intervention because it is an excuse to use force against true, physical property. Since no physical property is stolen during fraud, one can only conclude that "intellectual property" is being stolen, and the latter is an illegitimate concept.
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gotlucky replied on Thu, Aug 30 2012 12:20 PM

You have to be trolling. Fraud is theft. As others have stated, if you trade X for Y and receive Z, the person you traded with has stolen from you. They have taken X from you and did not give you what was agreed upon in return. Your physical property X was stolen during the fraudulent transaction.

Now, maybe there could be a case that not all identify theft is fraud, but to go ahead and claim that all fraud is not theft is wrong, at least so far as the NAP and libertarianism is concerned.

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Fortunez replied on Thu, Aug 30 2012 3:25 PM

I recommend you do some more reading on Libertarian theory, specifically Rothbard's "Ethics of Liberty" which describes conditional contracts in great detail. If I trade you my money for your product, and the agreement is that I receive the product that you have advertised, then that is a conditional contract. My money is only your property under the condition that I received the product that you advertised. If the product that you gave me turned out to be something else, then my money is no longer yours as you have violated our conditional contract.

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Suppose Bob and Jones intend to make an exchange whereby Bob will transfer ownership of a carton of milk to Jones if Jones transfers ownership of $10 to Bob. Jones hands Bob the $10, Bob hands Jones the carton of milk. Jones gets home and realizes the carton is filled with water rather than milk. Hence, the conditions of the exchange have not been met, which means that no exchange has actually occurred. It is the same as if Jones and Bob failed to reach initial agreement and parted company. This failure of the exchange to occur is not in itself a tort.

The tort lies in the fact that Bob is still in possession of the $10, which belongs to Jones. Is Bob a thief? One wants to say yes, but....

Consider that Jones is also in possession of property which he does not own: namely, Bob's carton. So is Jones a thief too?

Perhaps theft only occurs when/if one party has his request for a reversal of the exchange (they each get their property back) denied by the other party?

Or we could say that each party is a thief, and owes the other 2x restitution. Suppose the carton full of milk is worth $.50, then Jones owes Bob $1 and Bob owes Jones $20. So, net, Jones wins $19. Since a fraudulent exchange is by definition not a mutually beneficial exchange, this rule for settling cases of fraud would assure that the perpetrator of fraud always paid something net to the victim. in effect, the victim would always get restitiution of an amount 2(V-F), with V being the value of the property of the victim taken by the fraudster, and F being the value of the property of the fraudster taken by the victim. As of now, I think I favor this view of fraud.

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cab21 replied on Thu, Aug 30 2012 4:15 PM

so it's ok to go into property record books, take and edit a deed, and kick people out of their houses because they no longer own the house after you edited the deed to the property to now have your new edited information on it?

it's ok to take someones name, bank account, property, simply if one wants to edit information?

it's ok to sell poisen in place of food?

as if a DRO would not have antifraud rules or the premise of capitalism does not have antifraud rules?

there is no such thing as property if people can just change information and take it at will.

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@cab21

I realize you're asking the OP, but I'll give you my answers as well.

so it's ok to go into property record books, take and edit a deed, and kick people out of their houses because they no longer own the house after you edited the deed to the property to now have your new edited information on it?

If a person edited a deed and convinced everyone that he was the rightful owner of the house, he is still not the rightful owner of the house. If he takes possession of the house, he is a thief. If he kicks out the rightful owners by force, he is liable for that use of force.

it's ok to take someones name, bank account, property, simply if one wants to edit information?

Same as above. Altering the document does not change who is the rightful owner of the property. Ownership does not stem from the document itself, the document is just evidence of ownership.

it's ok to sell poisen in place of food?

The person who did so would be guilty of fraud (which I'd deal with as described in my post above), and if someone actually ingested the poison and was harmed they would also be liable for that, the same as if they poured poison in the person's coffee.

And a general point: you notice how many different kinds of issues come under the heading "fraud"? This is why I think it's not very useful to talk about fraud. It's better to consider the nullification of an exchange when the conditions aren't met separately from any torts which may result therefrom, than to lump them all under "fraud."

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cab21 replied on Thu, Aug 30 2012 5:07 PM

looking up definitions.

a fraud is an intentional deception made for personal gain or to damage another individual;

by definition that is anti free market capitalism.

if the op means state legislation is statist, then yes from definition it is. if he means that banks or DRO's  are statist should they have fraud protection service, then i don't think that is the case that the banks or DRO's are statist

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a fraud is an intentional deception made for personal gain or to damage another individual;

by definition that is anti free market capitalism.

Capitalism is protection of personal property and nothing more. No property is being "stolen" during fraud- a person's identity is not a form of property. Saying otherwise suggests non-physical, intellectual property is legitimate, which is wrong.

Fraud is theft. As others have stated, if you trade X for Y and receive Z, the person you traded with has stolen from you. They have taken X from you and did not give you what was agreed upon in return. Your physical property X was stolen during the fraudulent transaction.

As for this, which is basically a repeat of the water bottle example, the seller is not the one committing theft any more than the buyer committed theft by buying the wrong product. Individuals do not have an entitlment to be protected from their own poor decisions by statist antifraud institutions.

What you are trying to say is that he is breaching a contract, but under libertarianism contracts should be at-will rather than enforced by some agency. Without at-will contracts, slavery would be justified.

The seller is also not guilty of theft because no aggression was used during the transaction. Handing someone a water bottle, regardless of whether it is the particular type of water they agreed to get, or regardless of whether or the seller passively accepted their money, is not aggression under any non-ridiculous definition of the term. Again, you are statist because you are trying to justify legislation like truth in labeling regulations.

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HabbaBabba replied on Fri, Aug 31 2012 11:42 AM

Oh, alright. So you think there should be an agency protecting lying salesmen from retaliation by their customers? Statist...

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Oh, alright. So you think there should be an agency protecting lying salesmen from retaliation by their customers? Statist...

I am not a statist. You advocate the kind of truth in labeling regulations that crush small businesses and promote corporatism.

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HabbaBabba replied on Fri, Aug 31 2012 11:49 AM

When?

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They're a form of the antifraud regulations you are trying to defend.

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HabbaBabba replied on Fri, Aug 31 2012 12:08 PM

What? Where... The hell are you talking about?

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Do you think antifraud legislation is inherently illegitimate and statist like all other forms of regulation? If so, I agree with you.

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Obviously a person might steal physical property or deliberately poison someone, but those are dealt with under separate laws, and fraud (fraud itself, not using it as a means to commit some other crime any more than some statists would argue that driving should be a crime to prevent people running over pedestrians) is completely legitimate. But I assumed people here were against intellectual property. I may have been wrong.

Antifraud legislation is meant to prevent businesses from marketing their own product under another company's brand or another intellectual property characteristic of the product. For example, it is illegal for new macaroni companies to package their product as if it was Kraft macaroni and cheese, because that would would be "fraud".

This is a clear reason why fraud should be legal, because making it illegal is a form of intellectual property protection, in this case and in all other instances of fraud.

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gotlucky replied on Fri, Aug 31 2012 1:46 PM

This thread is good for laughs. Sometimes things just get too serious around here. Thanks for keeping things in perspective, ajklagrgafakl.

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cab21 replied on Fri, Aug 31 2012 3:29 PM

i did not justify legislation

i said fraud is immoral

dro's would deal with fraud

contracts would deal with fraud.

anyone who ignores fraud is a idiot risking his/her life and the lives of others.

identidy is the foundation of property, if we don't have identidy, we don't own physical things as anyone can claim to be anyone, anyone can claim to be owner of any physical property and anyone can claim to be anyone and forge papers to say they own anything. part of physical property is being able to trace it back to a legit owner, if identify is subjective at whim to be stolen, then there is no way to trace ownership back to a owner.

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part of physical property is being able to trace it back to a legit owner, if identify is subjective at whim to be stolen, then there is no way to trace ownership back to a owner.

Stealing physical property is different from fraud. There is no physical property stolen when a bank account and so forth are registered in another person's name, or when a mislabeled product is sold; or, if trading a misabeled product is "stealing", then both parties are equally liable.

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it is illegal for new macaroni companies to package their product as if it was Kraft macaroni and cheese, because that would would be "fraud".

No, it is illegal because it is a violation of trademark. It should be considered fraud;  trademark (and other forms of intellectual property) laws should be considered illegitimate. Again, fraud is (and ought to be) outlawed because one party, for example, takes money from another party in exchange for product A, but under guise that it was actually product B. The selling party has not held up their end of the bargain. This has similarities to contracts agreed to under duress, and those should not be upheld either.

There is no right to commit fraud (impala). To do so is not very (cavalier). 

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cab21 replied on Fri, Aug 31 2012 6:01 PM

stealing physical property is part of fraud.

if i have a credit card, and someone steals the information from my credit card, they can use my credit card to purchase products in my name, stealing my money and commiting fraud. this is called credit fraud. a collection agency will try to collect from me, not the random person who stole my credit card information.

if someone registeres a bank account in another persons names, the dro of the original person will find out about the activity and the original owner would have protection.

if someone trades a mislabled product, the purchaser is not liable for the fraud of the seller.

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This has similarities to contracts agreed to under duress, and those should not be upheld either

That's a stretch. There is no duress taking place during fraud- in fact duress requires that the victim(s) be aware of the crime, while fraud can only occur using deception. Lying certainly isn't a crime (by itself).

No, it is illegal because it is a violation of trademark.

I don't understand how you can consider lying about trademark a form of fraud while acknowledging IP is illegitimate.

I'm sure you would be right up there assisting the 19th century progressives in campaigning for the "truth in labeling" portions of the tyrannical Pure Food and Drug Act.

this is called credit fraud.

That's called stealing. Credit card fraud itself does not necessarily involve stealing money, it merely involves opening/possessing (without physical theft) a credit card in someone elses name.

 

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cab21 replied on Fri, Aug 31 2012 6:32 PM

http://en.wikipedia.org/wiki/Identity_fraud

if someone uses my name to hire a hitman, i will be the one blamed for the hitman.

i will be held responsible for bank accounts oppend in my name, so if someone opens a account and commits crimes, i will be blamed, not the random person who stole my name.

if someone writes a book advocating childrape, then uses another persons name, picture, signature, personal seal. people are going to blame the person represented to write the book rather than the real author if the identity fraud is successfuly pulled off.

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