(Poets&Quants) — You don’t sucker punch Chuck Norris. You don’t tug on Godzilla’s tail. You don’t try to take a bone from a 120-pound Rottweiler. And you never, ever try to overcharge Harvard Professor Benjamin Edelman for Chinese take-out.
When Boston-area restaurant Sichuan Garden charged the Harvard Business School professor $4 more than its web-advertised price for spicy chicken, chili-and-peanut prawns, stir-fried chicken, and braised fish filets, Edelman didn’t take it personally—he took it globally.
If Sichuan Garden was dinging him an extra dollar per dish, they must have been doing the same to every other customer ordering takeout, he reasoned.
And that, to an activist academic who has taken on the airline industry over dishonest pricing schemes, meant war.
“Under Massachusetts law it turns out to be a serious violation to advertise one price and charge a different price,” Edelman wrote to Ran Duan, the son of the Sichuan Garden founders, after Edelman’s initial email complaint to the restaurant drew a response from Duan saying, “Our websites prices has been out of date for quite some time (sic).” Duan offered to email an updated menu.
Edelman didn’t want a menu. He wanted accountability.
“I suggest that Sichuan Garden refund me three times the amount of the overcharge,” Edelman wrote on Dec. 5, in email correspondence obtained by Boston.com. “The tripling reflects the approach provided under the Massachusetts consumer protection statute, MGL 93a, wherein consumers broadly receive triple damages for certain intentional violations.”
Duan responded with a promise to “honor the website price” and refund $3 to Edelman. “Let me know if that works for you,” Duan wrote.
It didn’t.
“Your restaurant overcharged me $4, not $3,” Edelman replied the next morning, before opening up a can of consumer-protection whoop-ass on the hapless Duan. “It strikes me that merely providing a refund to a single customer would be an exceptionally light sanction for the violation that has occurred. To wit, your restaurant overcharged all customers who viewed the web site and placed a telephone order,” Edelman wrote. “I have already referred this matter to applicable authorities in order to attempt to compel your restaurant to identify all consumers affected and to provide refunds to all of them, or in any event to assure that an appropriate sanction is applied as provided by law.”
Duan, however, further provoked Edelman’s wrath by claiming the prices posted on the website for Sichuan Garden, which has two outlets, could vary by location.
“We are a mom and pop restaurant. We work hard to make an honest living and we do not rip people off. We do not have a proper budget for … website updates,” Duan wrote. “I apologize for the confusion, you seem like a smart man, But is this really worth your time?”
Edelman replied that the website lists both locations. “Increasing the price of each and every item, and not updating the site for a long period – that just won’t fly,” Edelman wrote. “You’re right that I have better things to do. If you had responded appropriately to my initial message – providing the refund I requested with a genuine and forthright apology – that could have been the end of it. The more you try to claim your restaurant was not at fault, the more determined I am to seek a greater sanction against you.”
Clearly, Sichuan Garden messed with the wrong guy.
Not only does Edelman have a PhD in economics and a law degree from Harvard, he teaches courses on online commerce, as a professor in one of the world’s most prestigious business schools. He has a particular expertise in shifty advertising – and a history of defending customers from unscrupulous operators.
His 2013 paper, “Misrepresentation of Fuel Surcharges in Airline Price Advertising,” took aim at major airline industry players, including American Airlines, British Airways, Air France, and Cathay Pacific. Edelman and co-author Xiaoxiao Wu accused the carriers of violating U.S. Department of Transportation rules by misrepresenting costly fees as “taxes.”
The report authors’ suggested resolution foreshadowed Edelman’s demand during The Great Sichuan Chicken War: “Any airline [that] has charged a fuel surcharge that is impermissible under law should refund the unlawful amounts to affected consumers.”
In fighting the airlines, Edelman employed a tactic he would later use in the battle against Sichuan Garden: an appeal to regulators. In an effort to put an end deceptive airline pricing advertisement, he filed complaints with the Department of Transportation against seven airlines.
In the restaurant dispute, Duan’s refusal to take responsibility led to an escalation of Edelman’s demands. No longer satisfied with a $12, triple-damages penalty, to which Duan had agreed, he now wanted more. “On reflection, I suggest making my order half-price – that’s appropriate thanks for my bringing this matter to your attention, since it seems you wouldn’t have recognized the urgency of correcting the web site had I not pushed you to do so.”
With that demand, which would have amounted to a refund of $26.68, Edelman had hit a wall. Duan replied that since Edelman had notified unspecified authorities, Duan would wait to see what the authorities had to say before issuing any refund.
Edelman might be criticized as petty and vindictive for upping his demands in the face of the small businessman’s intransigence. The HBS professor might even be called a bully for delivering a smackdown on a “mom and pop” over a $4 bill dispute.
But Edelman’s argument about aggregate results is sound: $4 for one order, multiplied by dozens of orders per night, could amount to thousands of dollars a week. And by knowingly advertising lower prices than it actually charged, Sichuan Garden was giving itself an edge over its competitors.
“Should small businesses get a free pass?” Edelman asked Poets&Quants, when contacted about the Sichuan Garden dispute. “I wonder if that really makes sense. The restaurant at issue knew the website prices had been ‘out of date for quite some time.’ At what point should they do something about it?
“We all rely on trust in our daily lives – that when sales tax is added, it actually applies and equals the specified amount; that the meter in a taxi shows the correct amount provided by law and measures the actual distance; that when you order takeout, the price you see online matches the amount you pay in the restaurant.
“We all take most of this for granted. It would be a lot of trouble to have to check these things day in and day out. That’s exactly why we should be concerned when folks fall short – because hardly anyone ever checks, so these problems can go unnoticed and can affect, in aggregate, large amounts.
“I’m pleased to have at least gotten the problem fixed for the benefit of others.”
Sichuan Garden’s Duan did not respond to a request for comment from Poets&Quants.
