Meaning, Purpose, and Cause in the Law of Deception
49 Pages Posted: 9 Feb 2011 Last revised: 28 Oct 2015
Date Written: February 7, 2011
Laws designed to affect the flow of information take many forms: rules against misrepresentation, disclosure requirements, secrecy requirements, rules governing the formatting or packaging of information, and interpretive rules designed to give people new reasons to share information. Together these and similar rules constitute the law of deception: laws that aim to prevent or cure deception. One encounters similar problems of design, function and justification throughout the law of deception. Yet very little has been written about the category as a whole. This article begins to sketch a general theory. It identifies three regulatory approaches. Interpretive laws, such as common law fraud, prohibit the making of untrue statements. These laws work by giving legal effect to commonly understood extralegal norms of interpretation and truth telling, in order to achieve specifically legal ends. Purpose-based laws, such as the tort of concealment, target acts done with a bad intent. Rather than employing an objective standard of behavior, they define the object of regulation by an actor's wrongful state of mind. Finally, causal-predictive laws employ everyday folk-psychology, empirical studies or cognitive theory to predict the informational effects of narrowly described behaviors. Much consumer protection law is of the causal-predictive sort. These regulatory approaches reach different types of informationally significant behavior, are suited to different regulatory ends, and require different institutional competencies. After describing the strengths and weaknesses of each approach, the article applies the theory to the Lanham Act's false advertising provisions. In deciding Lanham Act cases, courts have arrived at a complex set of rules that include all three approaches. A critical analysis of those rules illustrates the theory's ability both to explain the law of deception and to recommend improvements in it.
Keywords: fraud, misrepresentation, disclosure, interpretation
JEL Classification: K00, K10, K23
Suggested Citation: Suggested Citation