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The Jewish Ethicist - Devious Discount

May 9, 2009 | by Rabbi Dr. Asher Meir, Business Ethics Center of Jerusalem

Discounted from what?

Q. Our mail-order firm sells discount merchandise. When there is a standard price (e.g. a catalogue or suggested retail price) we tell the customer the discount from that price. When there is no standard price, can we estimate the discount from a fair store price?

A. In all of our dealings we are forbidden from deceiving others, leading them to believe they obtain a benefit from someone beyond the person's actual effort. Such deception is called geneivat data, literally "stealing judgment". When people are improperly informed, their judgment is not exercised freely. Leading others to believe they obtained a discount when in fact they pay a normal price would definitely be an example of geneivat daat.

When the customer actually relies on a false representation, then the situation is worse. In many cases the agreement would be void. The Jerusalem Talmud discusses a situation virtually identical to misleading customers about the market price. It talks about an employer who tells prospective employees, "Work for me for five just as your friends did", and the workers agree on the basis of this understanding. Afterwards it turns out that other workers were receiving more than five, and the employer misled them. (1) Most prominent authorities rule that in this case the work agreement is void. There is a presumption that the workers only agreed to such a low wage because they presumed that this was the going rate; if they had known that the going rate was higher they would have refused. (2)

We would have a parallel situation if a customer agreed to buy an item only on the basis that the discount is as advertised. Perhaps this customer much prefers to buy from a store, and only the great discount convinces him to order by mail. If there is evidence that the customer bought solely on the basis that the price is what others are paying, he would have a strong claim to being able to return the object and reverse the sale.

The above analysis is not precisely applicable to your case. According to your question, you are not trying to mislead the customer but on the contrary to help him, by giving your best estimate of a fair store price. However, I am taking pains to emphasize this point because I think that misrepresenting the fair or market price is a common form of fraud and customers and merchants alike should be made aware of its seriousness.

Even your situation presents a number of problems. Even if you are doing your best to present a fair evaluation, you are an interested party and this is certain to color your judgment. (3) The Torah likens weights and measures to judgment: "Don't do any injustice in judgment; in dimension, weights or volume. Right scales, right weights, right dry measure and right wet measure shall you have; I am the Lord your God who took you out of the land of Egypt." (Leviticus 19:35-36.) And a person is hardly able of judging himself impartially.

In addition, the customer deserves to know that the "store price" cited is only an estimate, and this would be true even if the estimate were made impartially.

The ethical solution to the problem is to declare explicitly that the price is "Estimated store price" or "Equivalent store price" – some expression which will be transparently understood by the average customer. The ideal solution is to explain exactly how you arrive at this figure. After all, if you decide that the store price is 25% higher than your price because you decide that your price is 20% lower than the store price then your "discount" conveys no information at all. It reflects no more than your opinion. If you want to provide "constructive" prices, you should explain somewhere on your site: "Equivalent store price is calculated by comparing prices for similar items" or "by comparing markups for similar items at high-end urban department stores."

SOURCES: (1) Jerusalem Talmud Bava Metzia 6:1. (2) See Nimukei Yosef Bava Metzia 45b, Beit Yosef Choshen Mishpat 332. (3) See Aaron Levine's book Economics and Jewish Law, pg. 24, for an analysis of the problem of self-assessment.



The Jewish Ethicist presents some general principles of Jewish law. For specific questions and direct application, please consult a qualified Rabbi.



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