In a free society, would psychics be prosecuted for fraud?

How would the government in a rational, free-market system handle people and businesses, such as the Psychic Friends Network, which claim to have psychic powers (such as being able to talk to the dead) and charge the gullible hundreds of dollars in fees for "spiritual consultations"? Would the government prosecute such people for fraud? Or would the government have a "caveat emptor" attitude and say, "If people want to waste their money on that nonsense, that's their rightful prerogative"?