Business Unit

  • by: Zev Silver

1. Financial Deception
2. Cheating With Words
3. Advertising and Misleading
a) Bait and Switch
b) Weasel-Word Stratagem
4. Laws on Interest
5. Competition

אונאת ממון
Financial Deception

1) The gemara Shabbos tells us that after 120 years the first question that a person is asked is “נשאת ונתת באמונה” – “Have you always been honest in your business dealings?” We learn from this how important it is to always be a Jew—not only when we go to shul and learn Torah but in the business world as well. Our job is to be a 24-hour Jew. This gemara is the theme for our mitzvah fair unit.
2) What is אונאת ממון ? The Torah wants to protect us when we buy and sell products. The Torah also realizes how important it is to make a profit but it also doesn’t want us to totally rip someone off. Therefore the Torah tells us that we should not make a profit of more than 1/6 (16.66%). For example, if I am selling a used car to someone for $5000 and the car really only cost me $3000 then I have overcharged and have gone against the law ofאונאת ממון . If, however, I let the person know that I am overcharging him and he still wants to buy it then that is permissible.
Let us say that I live in Israel and I sell cars. Am I allowed to sell a Mercedes for $15,00 if it cost me $10,000? On the one hand, the answer should be no because I am taking 1/3 profit and I am not allowed to take more than 1/6. However, if people are willing to pay that much for a car then that price becomes the market price. A market price is defined as something that people would be willing to pay for an item. Since people willingly pay this price it is permissible to charge that amount. However, you still would not be allowed to make more than 1/6 profit than the market price. That is, if the market price of the car is $15,000, you would not be allowed to charge $20,000 because that is more than 1/6 profit.
3) Nowadays, when everything is sold based on the market price and all buyers realize that an item is worth a lot less than what they are paying for it, the laws of אונאת ממון are limited. You can basically sell an item for any price that you think that you can get for it and you don’t have to worry about 1/6 profit. However, the Shulchan Aruch says that if possible in an area where people will listen to one
בית דין the rabbis should make a rule that on essential food items (flour, oil, wine) the stores should not make more than 20% profit. It is interesting to note that in Baltimore, Maryland in the 1980’s the Rosh Yeshiva, Rav Yaakov Yitzchok Ruderman Z”TL, very well respected by the entire community, saw that the prices for lulavim and esrogim were getting out of hand. He therefore made a rule that in Baltimore a lulav and esrog could not be sold or bought for more than a certain price. He realized that everyone would need to buy these items for Yom Tov and he felt that sellers were changing too much since they knew that people had to have a lulav and esrog and would pay a lot of money for it.
The Torah wanted to protect the sellers as well. You are not allowed to buy an item at a very cheap price if the seller will lose more than 1/6. For example, if you buy an esrog for $15 and you know that the value of it is $20 and the seller doesn’t know that it is worth that much then you have gone against the law of אונאת ממון . If, however, the seller knows how much it is worth and still chooses to sell it for less than that is not a problem.
4) A person is not allowed to make something look like it is worth more than it really is. For example, it is forbidden to give an animal bran water to drink in order to make it appear bigger than it really is so that someone will pay more for the “added beef”. Putting a fresh coat of paint on an old car is not permitted either because you are making the buyer think that the car is really better and newer than it really is.
5) There is no problem with selling below the market price in order to attract customers to your store. You are also allowed to give out free gifts to customers so that they want to come to your store. Later on we will learn the laws of competition and השגת גבול.
6) The Torah wants us to be very careful not to cheat people by not weighing things properly. We should always give the customer a little more in order to make sure that we are not giving less and going against the law of אונאת ממון . Our measuring scales have to be accurate (today many measuring scales are computerized). The leaders of the community are obligated to hire inspectors to go around and make sure that they aren’t cheating.

הונאת דברים
Cheating With Words


1) If you go into a store and you have absolutely no interest in buying an item you are not allowed to ask to price of the item. By doing so you are making the owner think that you might be interested in the item and he could get his hopes high and invest his time with the potential sale.
2) If you are selling something and you are offered a price that you accept, you must consider it a done deal. If after you agreed on a price someone offers you a higher price you should not accept it. If you do the rabbis call you aרשע . If you haven’t agreed on a price then you can take a higher bid from somebody else.
3) In business it is important that we don’t go back on our word. If someone does go back on his word the Beit Din says the following:
“מי שפרע מאנשי דור הפלגה ומאנשי סדום ועמורה וממצרים שטבעו בים הוא יפרע ממי שאינו עומד בדברו”
4) Included in דברים אונאת is saying one thing but really meaning something else. For example, we should not invite someone to a meal if we definitely know that the invitation will not be accepted.
5) A person cannot lie about an item that they are selling. You cannot say that a car has never been in an accident if it really has. You cannot lie about how many miles the car has been driven. As we will learn later, a person must be careful when advertising to make sure that what is being said is truthful.

גניבת דעת בפרסום
Misleading in Advertising


1) There is a Roman saying that states, “Let the buyer beware”. This means that it is the buyers’ responsibility to make sure that the item that he is buying is in a good condition. Torah law, on the other hand, requires the seller to disclose what is wrong with the item. If he doesn’t do this he is guilty of a form of stealing known as גניבת דעת . A person who wraps a defective item in fancy paper to make the buyer assume that he is buying a new and non-defective product is guilty of גניבת דעת.
2) You are working in the kosher section in Tom Thumb and someone asks for a pound of salami. You notice that the salami roll that you are about to cut from went bad. You don’t tell the person this but rather you say that since you are such a good customer I am opening a brand new salami for you. The person feels great and will definitely come back to the store because of what you said. This is considered advertising that is misleading and against halacha. It is considered גניבת דעת because you make the person perceive a situation incorrectly.
3) A store advertises that they are having a special 50% off sale for one week on ice cream because they care so much for their customers during the hot summer. The real reason they are having the sale is because the store is installing new freezers in a week and they must get rid of all the ice cream by then. This is against halacha. It is considered גניבת דעת because you make the person perceive a situation incorrectly. They might continue to come to your store because you “cared” for them during the hot weather even though you were really just trying to get rid of your ice cream.
Bait and Switch
In order to attract customers to the store the store advertises a sale on computer color printers for $25. When you get to the store you find out that they only had two of those printers for sale and they were already sold. The salesman tries to convince you to buy a higher priced item. This is against halacha because you went to the store thinking that you were going to buy that cheap printer and they only advertised the sale so that they could get you into the store to buy a higher priced item. However, if the advertisement states that the printers on sale are limited in quantity and they are selling them on a first come first serve basis then that is OK because you know when you are going to the store that the store might run out of these printers.
Weasel-Word Stratagem
A bottle of ammonia cleaning liquid reads: “it cleans like a white tornado”, “Your floor will shine like the moon”. An ice cream ad reads: “This ice cream is by far the best ice cream in the state of Texas”. These advertisements were designed to convince people that their product is great. They are not completely truthful. Is this considered גניבת דעת ? If people will be misled by these advertisements then it is considered -גניבת דעת ? If, however, people will realize not to take the advertisements literally then it is not.גניבת דעת
An airline advertises that they are now offering Ambassador Service. This is really First Class service but they changed the name to make you think that it is something extra special. You might choose this airline because of the “new service” that they are offering. This would be against halacha. This is considered גניבת דעת because you make the person perceive the situation incorrectly.
1) A person can advertise that the vacuum cleaner that he is selling for $200 is much better than other brands for $200. He should not however advertise that his $200 vacuum is much better than the one that is being sold by his competitors for $100 because of all the deficiencies that the cheaper brand has (i.e. it makes more noise than the higher priced brand). This is deceptive and might come in the category of גניבת דעת .
Our rabbis have told us to be careful not to gain in our business at someone else’s expense. We should not advertise that our products are much more superior to someone else’s, or that someone else’s products are inferior. The Gemara says that “anyone who elevated himself at the expense of his friend has no share in the world to come”. We can demonstrate that our products are good without saying bad things about others.
2) From the words “ביומו תתן שכרו” we learn that an employer must make sure to pay his workers on time. When should you pay your worker? If he finished it at night he should be paid then. However, if the employer reaches an agreement with the employee before he starts working for him that he will pay him at certain times then that is fine. But the employer must make sure to pay the employee at the made up time. If he doesn’t then he goes against what the Torah says “לא תלין פעלת שכיר אתך עד בקר” “You shall not withhold your workers wages until morning”.
3) If you hire a worker to fix cars and he does a bad job, but he is poor and doesn’t have food to feed his family you should still pay him his wages for that day. It is also a mitzvah not to make him pay for he work that he ruined even if he was negligent.
4) If you own a food factory your workers are allowed to eat while on the job. The reason for this is that they could experience mental anguish if they worked with food all day but were not allowed to eat any of it. Although they could eat while working they cannot just choose to sit back every few minutes to take a break and munch away. The worker should also not take from the most expensive food. An employer can make a deal with his workers that he will pay them extra if they agree not to eat on the job. If you have a maid or a babysitter in your house they can take food from you to eat while working in your house. They obviously are not allowed to take food home with them. Once again if you make an agreement with them that you will pay them more in order that they should not eat in your home that is fine.
5) The worker has an obligation to work to the best of his ability. He is not allowed to waste time on the job. A worker is not allowed to cheat or steal. He cannot even take smaller items home like pens and paper from the company that he is working for.
6) A worker must get enough rest in order to work. A person who works all day should not take on a night job because he will not be well rested for the next day of work. A teacher must be especially careful to sleep enough and to eat well since he needs a lot of patience while teaching. Rabbis have even permitted teachers to leave early from davening in order to go home and eat a nurturing breakfast.

הלכות רבית
Laws on Interest


1) It is very easy to justify going against the laws of charging interest. The borrower needs the money and would be more that willing to pay interest in order to have the money. The lender could feel that he is doing the person a favor by lending him money even if he is charging less interest than the bank.
2) The Torah says in Parshat Mishpatim:
” אם כסף תלוה את עמי את העני עמך לא תהיה לו כנשה לא תשימון עליו נשך” — If you lend money to any of my people with you who is poor, you shall not be creditor to him, (don’t cause him pain if he is not able to pay you back) nor shall you lay upon him interest.
3) If a person did charge interest he is obligated to return it to the one who he charged.
4) If a person doesn’t pay back a loan on time he is not allowed to be charged a late fee as this is also considered interest.
5) If the loaner gave the money to the lender but insisted that it was a present and not interest, it is still considered interest. However, in this case if the lender wants to give the money back and the loaner refuses to accept it there is no problem.
6) If a person sent a large present to someone with the intention that later on he was planning on asking for a loan, this is considered a form of interest. If the present came after the loan was paid back this is also interest. (If however the people normally sent presents to each other then it is not a problem).
7) If a person lent someone money on condition that the borrower would eventually lend him money when he needs the money, there is aמחלוקת – an argument as to whether this is considered interest . If however the lender tells the loaner that “I am lending you this money on condition that you will lend me a larger sum of money later on” then this is considered interest.
8) The loaner is not all owed to do favors for the lender that he would not normally do for him. If the lender and the loaner are not close friends and the loaner is sick in bed with the flu, the lender should not go and visit him if he would not normally have done so. If the lender is the גבאי in shul he should not honor the loaner with an aliyah that he would not normally give him.
9) If the lender normally buys from one grocery and now starts buying from the store that the loaner owns that is also a form of interest.
10) When you are lending with little monetary value to someone the lender doesn’t have to make sure that he isn’t paying back the loaner a tiny bit extra. For example, if a person is borrowing sugar he doesn’t have to measure carefully when returning the sugar. He can approximate and if more is given back by accident then that is not considered interest. It would be a problem if the lender purposely gives a lot more back to the loaner.
11) Some businesses will give a discount to a company who orders and pays right away as opposed to paying later (I believe they usually give 2% off). This is interest and is against the Torah. You obviously cannot charge more for a person who is not paying right away for what he is buying.
12) If a person is renting a house from someone else and he is late on paying the rent, the landlord is not allowed to charge a late fee because he is charging for “lending” the rent money to the tenant. However if rent money is due at the end of the month and the landlord tells the tenant that if you pay rent at the beginning of the month you be charged less that is OK.

הסגת גבול
Competition


1) This law was actually written concerning land. A person is not allowed to move someone’s borders – גבולות – back in order to have more land for himself. It can also mean that we are not allowed to change the borders of Israel between the land of the individualשבטים .
2) Some opinions state that if someone has a business and you open up the same kind of business close by you are in a way going into his business territory. For example, in 1551, a new addition of the corrected RAMBAM was being sold by two partners. Another person was upset that he wasn’t included in the partnership and published another similar addition of the RAMBAM and charged a lower price. Rav Moshe Isserles (RAMA) ruled that this was not permitted because it was causing a loss to someone else’s income.
3) A question: does a person have the right to do whatever he wants in the privacy of his property or is he forbidden to do something if someone else will lose out?
4) Years back a liquor license was paid for with a decent amount of money. Without the license you were not allowed to sell liquor. The authorities would only sell one per town. If someone had the license and earned his living by selling liquor, another person was unable to go to the one with the license and offer to pay a higher price for it since you would be taking away his livelihood.
5) Can you open a bakery next to an existing one? If you are opening a specialty bakery where many more fancy products will be available then you probably can do it. However let us say that your bakery is identical with the one that us across the street, with identical prices? If both businesses can be profitable then there is no problem. If, however, the second store will totally destroy the business of the first store then we have a -.מחלוקת Some say you can’t open the other store. Others say that the person cannot be stopped because he can say “I do what I want in my property and you do what you want in yours”.
6) A kashrut organization is giving hashgacho for a certain company and another kashrut organization comes along and offers to give the hechsher for a lower price. Is that permitted?