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The Jewish Ethicist: Rebate Racket

The Jewish Ethicist: Rebate Racket

Can I offer customers a fake rebate?


Q. Our store has advertised a rebate on purchases. But my boss has instructed me to inflate the usual price so that the after-rebate amount is the same as before! What should I do?

A. The policy you describe is definitely unethical. When a company advertises a sale, a markdown, or a rebate, the customer expects that the price he or she is getting is below the usual selling price. If the markdown is from an artificially inflated price, then the advertising is deceptive. In Jewish law, this is referred to as "geneivat da'at", literally "stealing confidence".

Even if the actual selling price is a bargain, the customer is being deceived into thinking that this particular merchant is lowering his prices. And such deception is forbidden even if it doesn't play a role in inducing a purchase. For example, sometimes a customer buys an item without inquiring about its price. In this situation, the merchant may not charge the regular price and tell the customer he or she is getting a discount, even though the customer would not be deterred from paying a higher price. In this case the merchant is obtaining undeserved good will by fabricating a "discount".

Your question is what you as an employee should do. You might want to rationalize going along with this policy with the excuse that it is the employer who is responsible for the policy, and furthermore that you are being coerced into cooperating since otherwise you would lose your job. In fact, an employee may never directly carry out an unethical policy. It would certainly be improper for you to actually tell the customer that he or she is getting a rebate, or to fill out a receipt showing a fictitious, inflated baseline price. Even the threat of losing your job cannot justify participating in such an outrageous deception.

If you have no direct involvement in the scam, then you need to assess to what extent the job you do enables the deception to take place, or aids and abets it. You should refrain from doing any task that helps trick the consumer. We explained many of the guidelines for doing an honest job in a dishonest workplace in a previous column. [See: Bad Business]

Send your queries about ethics in the workplace to

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

March 20, 2004

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Visitor Comments: 1

(1) simona, March 25, 2004 12:00 AM

a note for this employee is that the scam his employer is performing is illegal and he has rights under the law to protection from termination for doing the legal and ethical thing. I may be wrong, but I believe he would be best to contact the FTC and find out what he should do if his boss is unwilling to change his practices.
The unfortunate thing is that it is easy to circumvent the law in the manner that most large department stores do. They have these continual 'sales' where the 'sale' price is the regular selling price elsewhere and where the quoted 'regular' price is astronomically high. They prevent prosecution for their actions by changing the 'discount' every couple of weeks and by charging the astronomical price one day several days a month so that the sale is not considered continous and therefore illegal and unethical.
We as consumers have to watch out for these scams and must take responsibility for allowing retailers to dupe us this way (I personally boycott such retailers and instead go to TJMaxx, Syms, Target and similar retailers who do not look for loopholes in order to violate laws 'legally')
And we must be vigilant about the protection of people who choose to blow the whistle on unethical legal practices.

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