Fine Print is Too Overwhelming

A story in the New York Times describes the ordeal of the Bendor family, who purchased a cruise and travel protection from a company called Vantage Deluxe World Travel. The travel protection plan would protect them if they needed to cancel for any reason. When the father in the family had a heart attack before the cruise, the Bendors canceled, asked for a refund, and were issued vouchers for future travel purchased through Vantage!

Vantage claimed that the form of the refund would be a travel voucher, though, apparently this declaration was only in the fine print and only revealed after the Bendors had already paid their $10,666.14, including $978 for the travel “protection”.

Read the article for the ridiculous excuses Vantage gives to not return the money (protection is not a refund, the daughter–a Harvard law school grad–might make a career out of scamming cruise companies, we are the victim and being harassed). Despicable ethics aside, this story underscores the problem with asymmetric information. Markets do not work when one side has more information about the transaction than the other. Because this is known to be true, there are consumer protection laws that require providers of a product to disclose all necessary information about the product, and certainly Vantage did disclose the form of the “refund.”

The problem arises with the fact that providers can also disclose an overwhelming amount of useless information in an attempt to obscure anything pertinent but detrimental to them. This is the point of fine print: a provider hopes that by giving you so much information, you never get to the tiny stuff printed at the bottom. Real consumer protection laws will force companies to provide all pertinent information in a way that is usable.

In fact, the companies should be the ones pushing for this. In the long run, markets with asymmetric information will disappear. Vantage may have kept the ten grand, but they also created a situation where people will not purchase their product in the future–a penny-wise, pound-foolish behavior.

By the way, Vantage settled with the Bendors for an undisclosed amount, and they have guaranteed that I will never purchase any products from them, ever. I hope you consider doing the same.