Shouldering Chips

To settle a crinkly bag of lawsuits over illegal price fixing, Laura Scudder's Frito-Lay, Granny Goose Foods and five other manufacturers of potato chips and tortilla chips agreed to refund $3.8 million to retailers and $2.2 million to consumers in Arizona, California and Nevada. Company records listed the retailers involved, so that was no problem. But how to handle the refunds to consumers?

After three years of work on the distribution problem, company officials initiated a court-prescribed honor system. They published newspaper notices asking people to fill out forms categorizing themselves as light, medium or heavy consumers of chips. Heavy users were eligible for a $6.30 rebate, medium users for $5.30 and light users for $4.30.

The respondents proved to be remarkably honest: less than 1% broke the rules by filing more than one application. Among them was a man in Fresno, Calif., who apparently thought he was entering a contest. He bought 125 newspapers, completed the forms and mailed them all in. When the refund checks went out, one was sent to him--for $6.30, far less than what he had paid for the newspapers.

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