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Definition of 'Misrepresentation'

Misrepresentation is a type of fraud in which someone makes a false statement of fact, knowing that it is false, with the intention of deceiving another person and causing them to act on that statement. Misrepresentation can be committed in a variety of ways, including through oral statements, written documents, or even through silence.

In the context of financial transactions, misrepresentation can take many forms. For example, a seller of a security may misrepresent the financial condition of the company that issued the security, or the risks associated with investing in the security. A borrower may misrepresent their income or assets in order to obtain a loan. A lender may misrepresent the terms of a loan in order to induce a borrower to take out the loan.

Misrepresentation can have serious consequences for both the victim and the perpetrator. The victim may lose money, or they may be forced to enter into a contract that they would not have otherwise entered into. The perpetrator may face criminal charges, or they may be sued for damages.

There are a number of laws that protect against misrepresentation in financial transactions. The Securities Act of 1933, the Securities Exchange Act of 1934, and the Commodity Exchange Act all prohibit misrepresentation in the sale of securities and commodities. The Truth in Lending Act requires lenders to disclose the terms of a loan in a clear and understandable manner. The Fair Credit Reporting Act protects consumers from inaccurate or misleading information in their credit reports.

If you believe that you have been the victim of misrepresentation, you should contact an attorney immediately.

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