Disclosure

Disclosure is the principle that parties to a transaction — especially one with an information asymmetry — must proactively share material facts that would influence the other party's decision. In financial services, disclosure obligations are extensive: firms must disclose fees, risks, conflicts of interest, and regulatory status. In property transactions, sellers must disclose known defects. In legal proceedings, parties must disclose relevant documents to the other side.

From a scam-prevention perspective, inadequate or fraudulent disclosure is a defining feature of many fraud schemes. A fake investment scheme omits or misrepresents fees and risks; a romance scammer withholds their true identity; a clone firm presents itself as an authorised business. Regulatory disclosure requirements exist precisely because self-interested parties cannot be trusted to volunteer harmful facts voluntarily.

For consumers, disclosure documents (key information documents, summary pages, terms and conditions) are legally required but routinely ignored. Reading at minimum the fees section, the cancellation policy, and the risk warnings in any significant financial contract is the minimum prudent step before committing funds. Regulators can take action against firms for inadequate disclosure even where no fraud was intended.