FRAUD, Prevention of, an exercise of po lice power to stop deception, or to render its commission more difficult, or to facilitate its detection. The principal field for legislation for the prevention of fraud is found in the busi ness of brokers, agents and depositories- warehouse and commission men, auctioneers, etc.,— and in the sale of commodities, espe cially of substitutes, imitations and adultera tions, bankrupt and fire sales, and sales by peddlers or other itinerant dealers. Fraud is legally dealt with either criminally,— generally in cases specified by statute,— or civilly by granting or withholding remedies, or by pre ventive measures.
Congress can legislate for the prevention of fraud so far as interstate and foreign com merce is concerned. The Pure Food Law of 1906 serves partly for that purpose. A city ordinance will usually cover protection against fraudulent practices, particularly in the retail sale of merchandise and in the services of hotel-keepers, cab and taxicab-drivers, for which a stranger is likely to call. A State may exer
cise its power for the prevention of fraud, even though interstate commerce is thereby in directly affected; as example the sale of oleo margarine colored in imitation of butter was largely prohibited, though imported from other States and sought to be sold in original pack ages. As a useful article of commerce, how ever, the policy of prohibition of oleomargarine has been abandoned in all the States, the legis lation against it showing evidences of a desire to use the power of fraud prevention so as to suppress competition.
Governmental regulations to prevent fraud include the requirement of licenses, of reports, of notices, labels and marks indicating the char acter and quality or quantity of merchandise; the fixing of standards of weights and meas ures and sometimes of the form of packages. and inspection by public officials.