Q&A: Monetary Overcharging
Monetary Overcharging
Question
Lately we’ve been studying the chapter “HaKesef,” and a question came up for us: whether, and where, the laws of overcharging apply nowadays.
From the Talmud it appears that there is some obligation on the seller and the buyer to set / give a “fair” price, and if there is too extreme a deviation from it, the sale is voided, or at least the amount of the overcharge is returned.
A few possible mechanisms occurred to me:
A. In today’s economic reality, the definition of a “fair price” no longer has meaning because of the more dynamic nature of the market. True, this seems to me a weak mechanism, because even in their time there were fluctuations of high and low prices that changed over relatively short periods of time (even if not like today). In any case, no one can claim he was overcharged, because there is no reference point.
B. In today’s reality, “the time needed to show it to a merchant or his relative” is not relevant, because everyone has immediate access to a “merchant or his relative” through price comparisons. True, this is only correct in the internet era, and it seems to me that Jews traded and set prices as they pleased even before that.
C. Today’s reality is such that everyone knows that the merchant profits far beyond the price at which he buys, and everyone knows that there are significant price gaps, so it is as though they implicitly stipulated, “on condition that you have no claim of overcharging against me,” which is a valid stipulation according to Samuel, and as ruled by Maimonides and the Shulchan Arukh.
Do you have an explanation for this (your own or a commonly accepted view among halakhic decisors), and is there reason to be careful about the laws of overcharging in private sales, such as when selling second-hand items and the like?
Answer
Quite a bit has been written about this. Clearly, today’s market is essentially different from what it used to be. See, for example, Arukh HaShulchan, Choshen Mishpat 227:7:
There is another point that seems to me from his words toward leniency: with kinds of merchandise that not all shopkeepers sell at the same price, where some make a great profit
from this merchandise and some are satisfied with little, the law of overcharging does not apply at all to one who profits greatly, since that is the normal way of commerce, as there are
some who sell at such prices. For the Rosh, of blessed memory, made the doubt depend only on the fact that sometimes the buyer specifically wants this purchase, and then there is
reason to prohibit; this clearly implies that there are no sellers at such a price. But when there are sellers at such a price, there is no aspect of overcharging here.
And obviously one should not look at those shopkeepers who cheapen prices and sell inexpensively, for they damage themselves and damage the ways of commerce, and they will bear their sin…
And many others wrote that in a place where there are sales on a large scale (which did not exist in the past), across varying price ranges (both over time and by location depending on supply and demand, and also by type of store), and where there is a difference between luxury stores and other stores (which is considered like a different product), and so on, overcharging does not apply.
Rabbi Asher Weiss in Mishpetei Eretz 3 (pp. 344, 346):
It appears that even the Rema would agree with the Beit Yosef that in our time many products have no established “market price” at all, since the value of products changes
“anew every morning” according to supply and demand. The volume of commerce is also so enormous, and many factors affect the price, such as:
reputation, rental expenses, sales volume, and the like, so that in practice there are many prices for the same product, and “each person buys according to what he wants.”
It seems that only with a few products in which there is something like a monopoly, and only a small number of stores sell them, is it possible to determine an exact or average price and discuss the law of one-sixth overcharging. But regarding most items, such as clothing, electrical and electronic appliances, a used car, and the like, one cannot apply the law of one-sixth overcharging. Only when the overcharge is blatantly excessive, more than one-sixth beyond anything accepted in the market, is there room to discuss voiding the sale. For even today it is not accepted to inflate prices unreasonably, and any such act is a form of theft.
In second-hand sales, in my opinion, overcharging does not apply at all, because there there is no market price. Everything depends on the type of product, its condition, how available it is on the market, etc.
The reasoning based on “the time needed to show it to a merchant” is also very sound.
I don’t know whether one needs to invoke Samuel’s stipulation in order to permit it. My inclination is that here even Rav would agree. I think there is almost no situation in which this prohibition actually applies. Still, morally it is proper to keep the price reasonable within sensible limits. And perhaps when the price goes beyond the bounds of what is reasonable, there would be an actual halakhic prohibition, as Tosafot say regarding overcharging in land sales when it reaches half the value.