Difference Between Fraud and Misrepresentation

Fraud vs Misrepresentation

People treat fraud and misrepresentation as being same and they even use the terms interchangeably but there is a difference between the two concepts in the eyes of law and cases are dealt with according to the provisions of either. Though both fraud and misrepresentation have similar effects and there may be just a difference of intensity or magnitude, fraud is willful and attracts more severe penalty than misrepresentation that is less severe.

Fraud

Fraud is done with the intention of wrongful personal gains or to cause damage to another person. Fraud can be anything from claiming false health benefits from a product to giving false information for monetary gains. Embezzlement, identity fraud, deceit in gambling or other sports, forging figures in income statements, claiming wrong insurance claims, falsifying as a witness, inflating the invoices, forging signatures, forging currencies and so on. Fraud is a crime that has strict provisions in the law and is accordingly dealt with.

Misrepresentation

Misrepresentation, on the other hand, is mostly used in the context of contracts where a party may present facts in such a way so as to lure other party into signing the contract. Sometimes a manufacturer may not disclose all the facts about the product and by withholding these facts, he is trying to misrepresent the facts in the hope that consumers may fall in trap and buy the product. At times, it is innocent misrepresentation where the person presenting the facts may not be in the know of all the facts and thus may create misrepresentation. If information is presented in such a way that it looks true, but the picture becomes clear only when all relevant facts are presented, it becomes a case of misrepresentation.

In brief:

Misrepresentation vs Fraud

• Fraud is willful deceit while misrepresentation is merely not presenting entire information

• Misrepresentation sometimes takes place as the person may not have knowledge of entire facts but fraud is committed in the light of the day and the purpose is gaining at the expense of another party.