Boston.com and Slate Magazine recently poked fun at a young Harvard Business School professor whom I have counted as a close friend for more than 10 years. Ben Edelman ordered Chinese take-out from an online menu that was out-of-date, with prices $4 lower than the restaurant charged him.
He got into a funny e-mail exchange with the owner of the restaurant, a likeable bartender in Boston named Ran. Ben (being Ben) asked for treble-damages -- $12. As he pointed out in the e-mails, treble damages is his right under Massachusetts law, and provides a good incentive not to defraud.
Of course, this story got the interest (and laughs) of writers at boston.com and Slate, and the articles resulted in thousands of likes, op-eds, posts and retweets. Everyone was laughing at “Professor Cranky Pants.” Even me. I immediately hit send on a finger-wagging e-mail telling Ben that he should pick his battles more wisely.
Another restaurant then forwarded 2011 e-mails from Ben about a Groupon coupon that the restaurant sold, but on which the restaurant did not honor its commitments in the fine print. The restaurant did not cover the fixed-price option. Again this looks on first blush to be a man who is not picking his battles wisely. Ben apologized on his Web site.
But after sleeping on it and speaking with other friends of Ben, I realized that if everyone acted as did Ben, the world would be a better place. Most of us just ignore the likes of a $4 overcharge because we have "better things to do," don't want to rock the boat or otherwise fear conflict. But that means that the next guy who orders Chinese takeout also gets overcharged a few bucks. Over years, that can mean tens of thousands of dollars for one restaurant. Multiplied by thousands of small restaurants, taxis, dry cleaners, lawyers, physicians, contractors and other small businesses, small-time fraud can mean billions of dollars filched every year.
We have all experienced petty fraud. Physicians have tried to get me to undergo procedures I later found were totally unnecessary. Taxi drivers have taken me on long, allegedly “fast’’ routes dozens of times in cities around the world. One even seemed to be spinning his wheels (and his meter) on purpose, consequently fishtailing all over the road, during a snowstorm. Grocery stores have charged me for items I never bought.
Did I take the time to challenge these businesses for a buck or two? Never. It didn't seem worth it. Who knows if that crazy cabbie will pull a crowbar on me? Does this mean that these businesses have little incentive to fix their overcharging? Yes. In fact, they have an incentive to overcharge: Petty fraud is a big source of often cost-free revenue. Not taking action leaves the problem to harm others.
It's a classic public-goods problem -- going after petty fraud helps everyone, but almost nobody is properly incentivized to enforce the law against small-time fraud. Even public prosecutors prefer the big cases that get them media attention and votes. If more of us took Ben's approach, fewer petty fraudsters and fewer bartenders with no incentive to fix their out-of-date menus would nickel and dime us to death. With more Ben-like attitude, we would live in a far better world.
Consider the good that Ben has done in his crusades against fraud. Ben told me a long time ago that in his public high-school in Washington, D.C., he found that heavy chains and a padlock were used to permanently lock an emergency door that by law should not be locked during school hours. If a fire had happened, this could have caused death or injury to a lot of kids.
Ben took a picture of the chained door, with a time-stamp, during school hours, and at some risk to his academic career given the power of his principal, pressured the school to henceforth keep it unlocked during school hours.
Ben is not only risk-acceptant, as pointed out by another defense of his counter-petty fraud activity, he is the kind of guy who loves to read the fine print. He found American Airlines and others lying about nonexistent “taxes” that were actually fees. He got the U.S. Department of Transportation to fine American Airlines, and ever since they aren't defrauding millions of customers in this way. That means that Ben has saved me a few bucks, since I fly American. Thanks Ben!
A couple years ago, Ben realized that Facebook was telling advertisers who its users were (including our names!) whenever we clicked Facebook ads. Facebook had repeatedly promised that it would never do this. Ben told The Wall Street Journal and it was front-page news. Facebook still gives away our names, but at least now explains itself and we know what Facebook is up to. I'm less likely to click those ads, and maybe I get less spam as a result. Thanks Ben!
Even Google's tricks against its customers have been discovered, and revealed, by Ben (who happens to know how to program Web-bots). He used those bots once to discover the Web pages, for example on human-rights stuff, that dictators in China and elsewhere censor from their people. I bet that those folks are happy that someone is looking out for their interests.
The Groupon e-mails are part of Ben’s bigger concern for the common man. He was quoted in 2011 in Forbes, where he raised the issue of potential consumer-protection violations by Groupon. When a consumer buys a Groupon from a restaurant or other business, that consumer has the right to expect that the terms of the fine print of that Groupon will be honored. When a restaurant fails to honor a promise it sells, the consumer who purchased that agreement takes a hit. This is petty fraud, and when summed across all Groupon restaurants, could result in millions of dollars of losses to consumers every year.
As with the Groupon dispute, most of Ben's attention is on big brand-name or big-time fraud and other malfeasance resulting in potentially millions or even billions of dollars of costs spread out thinly over all of us. He rightly gets a lot of positive attention for his work.
The Chinese take-out incident, however, reveals something even more extraordinary about Ben than all his achievements. He sent the e-mails not expecting that they would become public and give him fame. They were not meant to advance his career or make him money. $12 doesn't matter to Ben. His efforts resulted from a sense of injustice, and led him to inform a small proprietor of his duties, with an appeal to moral principles and the rights of him and others under the law.
Did it look a little silly when put in the newspaper? Definitely. But Ben took time from his other "more important" pursuits to stand up for a principle. He made an effort to hold the small businessman accountable, expecting nothing in return, as he does when he holds Google or the airlines accountable for billions of dollars of fraud.
Ben is a man of principle, and attempts to be a protector of all of us. Let's learn from Ben and stand up for ourselves when overcharged $4; by doing so, we stand up for each other. Ben's earnest concern for the little guy's nickels and dimes may seem silly at first. But Ben stands on principle, and those nickels and dimes can really add up.
Anders Corr, Ph.D., is principal of Corr Analytics Inc. (www.canalyt.com), which provides strategic analysis of international politics. He is also the editor of the Journal of Political Risk (www.jpolrisk.com). His areas of expertise include global macro analysis, quantitative analysis and public opinion. Dr. Corr maintains a global network of regional and subject-specific political risk experts.