The Law of Fraud

Fraud consists of inducing a person to enter a contract by making false representations or concealing material facts that should be disclosed. This type of fraud is often asserted as a defense to a contract. For example, a seller of a house might misrepresent that the house has a new roof, when in fact the house does not have a new roof. Fraud can even include a promise made without any intent of later performing the promise.  Fraud is defined at Civil Code §§1566–1574; and 1710.

If a special relationship exists (sometimes known as a confidential relationship or a fiduciary relationship, such as the duty an agent owes to his principal or the duty a trustee owes to the beneficiaries of a trust), fraud can also include any advantage the fiduciary obtains by reason of his/her position. Some examples may be: acquiring property from a trust for a bargain price, entering a transaction with the trust while acting as trustee, or obtaining an advantage over the other beneficiaries of a trust. (Civil Code §1573)

An attorney-client relationship is not created between the client and the law firm until the attorney and client execute a written retainer agreement describing the legal work to be performed.


Identity Theft

Victims of identity theft are provided with a measure of protection by California Civil Code §1798.93, which provides a person may bring an action against a creditor to establish that the person has been the victim of identity theft. The victim of identity theft may bring a complaint against a creditor demanding payment of an alleged debt or may assert his claim against the creditor in the form of a cross-complaint to a collection lawsuit. The statute allows for a judicial determination that the victim of identity theft is not liable for the debt and also provides for an award of actual damages, for example, monetary damages sustained by being compelled to pay a greater interest on loans as a result of a negative credit history; and award of attorneys fees and court costs; and equitable relief as the court deems appropriate.

If the victim of identity theft proves in court by clear and convincing evidence that he provided written notice to the creditor, at least 30 days before bringing the lawsuit or the cross-complaint, that he was the victim of identity theft, that the creditor failed to diligently investigate the victim’s notification of possible identity theft, and that the creditor thereafter continued to pursue its claim against the victim after the victim provided facts showing he was in fact the victim of identity theft, then the court may award a civil penalty, in addition to other damages, of up to $30,000.

Additionally, California Penal Code §530.5 provides it is a crime to willfully obtain personal identifying information of another person and use that information for an unlawful purpose, including obtaining or attempting to obtain credit, goods, services, real property, or medical information without consent of the person.

In the event a collection company or creditor makes claim for a purported debt against the victim of identity theft, the victim should promptly contact an attorney to address the claim and not ignore the claim. If a lawsuit by a creditor is ignored, even if it is groundless and even if it is the result of identity theft, it could eventually result in an adverse judgment for monetary damages against the victim.

An attorney-client relationship is not created between the client and the law firm until the attorney and client execute a written retainer agreement describing the legal work to be performed.