This is a complex situation, because another party is involved: the parents. The ethics and morality of accepting a payment (even if it also satisfies a debt) to let the son continue to defraud his parents is certainly something that reasonable people can debate.
By informing the parents you are getting involved in a situation you don't understand. The fraud could be reasonable based on previous actions. Parents know but there is nothing they can do at the moment so they decide to let it slide and confront in person when they make a surprise visit. Telling both parties changes that and removes the parents ability to ambush.
