Leasing License Practice Exam

What type of fraud is characterized by lying?

1. Passive fraud

2. Active fraud

3. Fraudulent misrepresentation

4. Constructive fraud

The correct answer is: Active fraud

The choice of active fraud as the correct answer is grounded in its definition, which involves the intentional act of deception. Active fraud occurs when an individual deliberately misrepresents information or engages in deceitful practices to gain an unlawful advantage or to harm another party. This form of fraud is marked by an overt effort to mislead, differentiating it from other types of fraud that may not necessarily require such direct deception. For instance, passive fraud typically does not involve an explicit lie but rather a failure to disclose critical information, whereas fraudulent misrepresentation specifically focuses on providing false information with the intent to deceive. Constructive fraud refers to situations where a party's actions, even without deceitful intent, lead to an unfair advantage or result. These distinctions highlight why active fraud is characterized by lying and direct involvement in deceptive practices, making it the appropriate selection for this question.