Economic fraud, part 2, real world situation


#1

No one has really answered my economic hypo from my previous thread on the subject, so I figure I’ll present the more complex version from the real world. Before doing so, real quickly, I had originally asked whether a buyer can morally sign a contract he has little to no intention of keeping with a seller when the seller forces, as a condition of the sale, that they buyer must let him be economically cheated. For example, the contract that seller demands includes language that buyer will not sue when the jurisdiction might ordinarily allow him to do so. So, can the buyer (lyingly?) “promise not to sue” to this chiseling seller when he knows he will. He knows seller cannot win in court, but that’s irrelevant to the moral question of “lying” on the contract.

Here’s the real life example: skip-city airline ticketing.

A traveler wants to fly from city A to city B. Because airline X has a near monopoly with city B, it can charge exorbitant rates to fly into there. However, X has to respect market competition with other cities. A savvy traveler discovers that a ticket from city A to city C on that same airline X, which is much further than the distance from A to B is actually cheaper than A to B because of competition, despite the fact that on the A to C route, there is a layover in city B. The savvy traveller can legally buy the cheaper A-C ticket, get off at B, and save lots of money, hundreds and sometimes thousands of dollars. This happens a fair amount in real life.

The moral problem occurs when the airline X makes you promise in the small print on the back of your ticket purchase that you will not do this legal practice. They want to keep their artificially inflated profits (from lack of competition - yes, why that lack of competition exists may be a relevant issue, but pretend it isn’t since it is more likely to distract). If Congress would act on this in any number of ways, reflecting our longstanding disdain of monopolies, the airline would not be able to get by with this. Ah, but such is not life as yet.

So, can the Christian buyer fight fire with fire, signing the contract knowing that what he intends to do is legal? Or, if the unfair airline X wants to extract a promise from him that he will allow X to cheat him by charging the higher price, must the Christian agree to let himself to be bound by the contract? Note that an airline passage is not an absolute necessity, but it may have some level of emotional “necessity” (like visiting Mom on her sudden deathbed), both as I pointed out in my previous post.

This is newsworthy as of late as one airline and one ticket agency (the latter, perhaps in cya mode) recently sued a young whiz who has a web site that has pointed out the deals made possible by the inefficiencies in the ticket pricing, at no profit (other than reputation) to himself. I expect the airline will lose at multiple levels, not likely wanting their documents to be subpoenaed, and as a matter of law and fact, and as a whim of a jury who will surely side with the young man helping travelers. Note, that the airline cannot sue the passengers either, for economic reasons, if nothing else (little to no provable damages, reputation hit, etc.).

The suit is largely irrelevant to the moral question. But I was called an “idiot” on another site by a suspected ultra-capitalist, who excoriated me over possibly defending economic fraud on behalf of the buyer. He was wrong that I was defending the buyer, as I merely keep an open mind. However, I thought I would pose the problem to my fellow CA denizens. Thoughts?


#2

Fascinating question. I think an airline ticket isn’t an “agreement” to purchase a particular flight in the same way, for instance, an “agreement of sale” is a written contract to purchase a particular piece of real estate. The purchase of an airline ticket seems to be rather the purchase of a license, which gives the buyer the right, but not the obligation, to take one or more airplane rides. Would you say the buyer has “lied” or is in “default” if he or she chooses not to use an airline ticket purchased? Of course not. The license just expires according to the terms agreed to by the seller and buyer at the time of purchase. It isn’t the particular flights that are bought, but rather the right to take a flight (or equivalent flights as they are often missed or rescheduled).

In this case, the “fine print” attempts to impose an obligation upon the buyer, but this is irrational, and I agree with you that it seems to exist in order to protect an non-competitive airline industry. If many buyers get off at city “B” but buy tickets for A-B-C, it will temporarily cause waste (empty seats on the way to C) and thus constitutes a harm to the environment, and to those who were unable to get a seat on the flight to C, etc. However, it seems to me like it would cause airlines in general to re-organize in a more efficient way as well as increase competition. On the macro level, the buyers who do this may be helping everyone in the long term. On the micro level, it is unclear to me whether this action is morally “wrong.” My intuition says this activity is perfectly acceptable since the buyer is acting both rationally and legally, it is the airline that is imposing an unfair and irrational term in the agreement. However, I’m sure an argument could be made that all rules must be followed, no matter how irrational, no matter how unfair.


#3

Does the person have to assent to these terms in order to purchase the ticket? Or, is it simply the case that, having bought the ticket, he receives it with these conditions listed in fine print on the back of the ticket?


#4

There is an “agree to terms” box that you have to check when purchasing on most (probably all) sites. So, you are agreeing to the terms.

The hidden city strategy is not unlike the tricks people came up with to circumvent the Saturday night stay rule of 20 years ago, the back-to-back or nested ticket strategy, or the throw-away strategy where one buys a cheaper round trip when intending only to fly one way.

The airlines have much more sophistication in detecting these schemes now, and they WILL penalize people who do this. Infrequent fliers have no skin in the game-- but frequent fliers could find their accounts frozen or revoked and future tickets confiscated/canceled, etc.

It may be breach of contract, if airlines wanted to play hardball, so it would be a civil matter only. It’s not illegal, but I do think it’s unethical.


#5

I don’t I believe simply not using a product you’ve purchased is immoral. For example, I went to purchase a MP3 album the other day and noticed that the CD was 10 dollars less and also came with a MP3 copy for free. Is it unethical for me to buy the CD if all I intend on doing is using the download code and tossing the CD? I’m doing the same thing that the hidden city purchaser is doing, taking advantage of pricing inefficiencies. The airlines themselves even admit that the practice isn’t illegal even if they do try to present it as unethical.


#6

I, and I think everyone else, agrees with you, but you have misstated the question.

The question is whether a Christian can “lie” (if “lie” is the correct word) about his intentions when he signs the contract. The contract for sale, i.e. the ticket purchase, states that the buyer will use the entire product, not getting off early. If the buyer does not agree to that term, the airline will not sell the ticket. The seller wants to unfairly (unfair, if you believe in antitrust principles) milk his monopoly, and the only recourse he has is to make the seller bound in conscience. Basically, the seller is exploiting only anyone who may have a conscientious objection to putative lying, as everyone else simply ignores the sellers extra terms without penalty. The buyer is acting legally, and his actual flight plans are not the seller’s business. Note that if the buyer honestly intended to fulfill the contract at the inflated price, but skipped out of the last leg of his flight for unforeseen reasons, there would not have been any lie, though the result would have been the same.

So, is intentionally signing that contract knowing that you will not comply with that unfair term forbidden on moral grounds? Thanks for your help in shedding light on the subject.


#7

I don’t believe that the business has any legal way of forcing you to obey that particular part of the contract. It’s just empty words. The airlines are extending their rights beyond what the law allows and I don’t believe clicking a mouse creates a moral obligation to follow their wishes.


#8

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