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A Otto Thav

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Pizza Accounting - an excerpt from my Silver Parachutes book
By A Otto Thav
Monday, October 20, 2008

Rated "G" by the Author.

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This is one of the incidents of middle manager scams that continues to occur and reduce our country's GDP (Gross Domestic Product).

Pizza Accounting



John is a middle manager at Opportunistic Inc., a collection agency. John, through his experience at the collection agency, studied the psychology of the average middle class person's vulnerabilities and their likely reactions. He realized that the majority of middle class people are busy working people. Most of them are unlikely to dispute credit card bills for less than $100. Especially if the bill is for a purchase they would likely have made. Even if they thought about disputing a bill, they'd have to weigh the amount of time they would have to spend versus just paying it off. He also figured they couldn't afford to pay an attorney to file a complaint with the courts.


John devised a foolproof way of taking advantage of these middle class people. John created false accounts due for his existing clients. For example, he made up a collection account for a local pizza store, showing various amounts owed. It is unknown if these clients were complicit with John. Are they getting a piece of the action from John?


John got lists from either credit card companies or marketing firms. These are lists of names and addresses of middle class people. He surmised that these are people likely to make purchases at local pizza stores. From the list, he chose addresses in neighboring states where his company is not incorporated and hence not registered with that state's agencies. He had several reasons for this:

  • Legally, a person outside John's state cannot use his state's agencies to file a complaint.

  • Other states do not have jurisdiction over companies incorporated in John's state. Hence, his company, Opportunistic Inc., could not be legally harmed by complaints from another state.

John then proceeded to mail intimidating collection letters to the people on his sorted list. It is unknown if John acted on his own volition, in order to meet his department's earnings quota, or if he was instructed by his CEO (Chief Executive Officer).


Jane, an innocent victim, received one of Opportunistic Inc.'s intimidating collection letters. It was printed in small illegible print-size and printed on legal-size paper. It asked Jane to send a check for $87.23 immediately to Opportunistic Inc. at a PO Box address in a neighboring state. The “Or else” threatened to inform Jane's employer, garnish her wages, put a hold on her bank account, and affect her credit rating. An account number and a non-descriptive name of a company were the only reference to the amount of $87.23, apparently owed by Jane.


At first glance, Jane panicked and racked her brain. She tried to remember if she may have made any purchases for the dollar amount listed on the letter. Jane read the intimidating long letter over and over again for about 45 minutes, in order to try and understand it. Still stressed, she checked all her past credit card statements to try to find a transaction closely matching the amount listed on the intimidating letter. This took her another couple of hours. Luckily, she had saved all her credit card statements. Otherwise, she would have had to order extra copies from each of her credit card companies at an extra cost. Next, Jane thought maybe one of her credit card companies might have lost the transaction. So she phoned all her credit card companies one by one. This took another two hours of being on hold. They all informed her that it would be impossible for them to lose a transaction because the process is computerized. “As soon as your credit card is swiped, the transaction is fully automated. No supporting paper work is sent to the credit card company, unless it is requested.”


The next morning, Jane spent more time looking up Opportunistic Inc.'s phone number, and of course the line was busy. When she finally got through, she was immediately put on hold. Since Jane had to leave for work, she hung up the phone. When she got home late that evening, it was of course too late to try to phone Opportunistic Inc. So after a few early mornings of trying to phone them, she gave up and hoped it was all just a mistake.


A few weeks later, she received a second more intimidating warning letter from Opportunistic Inc. Now Jane was even more panicked. So she took a day off work to deal with this problem. After several hours on hold, she finally got through to Opportunistic Inc. They asked for all her details, which they claimed they needed to look up her account. She then asked them what the bill was for, but they kept trying to keep her off balance by not answering her question. Instead, they just kept trying to intimidate her by asking her to send a check immediately or else they would have no choice but to inform her employer, garnish her wages, put a hold on her bank account, and affect her credit rating. Not being able to get an answer, Jane finally hung up the phone.


Jane proceeded to investigate on the Internet. She looked up the non-descriptive name of the company listed on the threatening letter. It turned out to be a pizza store in a neighboring state. Jane had proof that she had not traveled to that state. Hence, she knew she should complain. Jane was not a novice to consumer complaints. She knew whom-ever she complains to would ask her questions:

  • Did you phone the pizza store and try to solve this is-

    sue yourself?

  • When did you first try to phone the pizza store?

  • What was the date of your second try?

  • Etc.


Jane took the time and paid the long distance charges to phone the pizza store. They replied that she should call their accountant, but neglected to mention that the accountant only works a few days per month. After several tries, messages, and additional long distance charges, the accountant finally answered. He did not know what she was talking about, said he was too busy, and hung up.


Jane proceeded by writing complaining letters to several agencies, like the BBB (Better Business Bureau), her state's attorney general, and the neighboring state's attorney general. It took several weeks for the BBB and her state's attorney general to reply with form letters. Jane dutifully filled out their forms and sent them back.


Two week went by and the neighboring state's attorney general did not even reply. She received a third even more intimidating warning letter from Opportunistic Inc. Another week later, she received a standard generic letter from her state's attorney general. It was a form letter explaining that they could not legally do anything and provided an option to hire an attorney. Only the BBB, responded positively. They informed Jane that that they had forwarded her complaint letter to Opportunistic Inc. A few weeks later, the BBB forwarded Opportunistic Inc.'s reply to Jane. Opportunistic Inc. wrote that their client had decided to drop the charges and hence they were closing the account.


Another few weeks later, Jane was watching a report by a local television news station. They reported on how a few of their viewers had phoned in and complained about identical situations. It was the same company, Opportunistic Inc. The television reporter was proud to say the station was able to get through to Opportunistic Inc. to help their viewers get closure – “the charges were dropped”. Jane wonder-ed how many other people had been victims of the same scam but had not phoned the local television station. How many of these other people had paid the false bill?


This scam by the middle manager, John, causes the following:

  • Stress on several victims. This contributes to the lowering of health, which increases our nations’ expenses on health.

  • Makes these victims waste several days and hours of unproductive time off work. This contributes lowering our nation's GDP (Gross Domestic Product).

  • Makes our nation less competitive, when compared to other nations where this type of scam might not occur.

  • The victims have to pay several long distance charges.

  • Additional work for the BBB, the state's attorney general, and the local television news station. This also detracts from our nation's GDP.

  • The killing of trees – for all the paper and envelopes used by everyone involved in this scam.

Yet, no one was punished for this scam. Even if a government agency tries to investigate, John will likely destroy the evidence. Should we try and urge our government to expend more of our taxes to legislate laws to require collection agency companies to show more detailed proof for all accounts? In this case, the collection agencies will pay lobbyists to bribe our elected officials to derail any legislative efforts.


Jane considered that there are also several other scams similar to this. Jane had previously also experienced restaurant charges on her credit card statements that were different from the amount on her copy of the receipt. It's usually only off by a few cents or dollars. When she phones her credit card companies, they usually ask her to mail a copy of her original receipt. Here Jane has had to pay for photocopying, envelopes, and mail stamps. Then, based on the small dollar difference, the credit card company usually concurs with Jane and adjusts her account accordingly. Basically, the credit card company eats the difference since they had already paid the restaurant. It would cost them more to dispute it with the restaurant anyway.


Jane's accountant friends told her that this is a common practice among restaurant accountants. They do this on purpose to try and balance their accounts. Apparently, the accountants at these restaurants spread their accounting im-balance discrepancies to several customers knowing that most people and/or the credit card companies will pay with-out disputing.

We can estimate the total dollars lost by combining these types of collection agency and accounting scams:

  • If we conservatively assume the victims only constitute a minimum 1% of the population of our nation, annually. 1% of approximately 300 million (population of our nation) is 3 million people, who experience this type of scam annually.

  • We can use an average of $1 for the amount lost by each victim. This combines the less frequent collection agency's fake charges of $87.23 and the more frequent restaurant overcharges or the victim’s phone bill. Hence, it does not matter if the victims dispute the fake charges or not; they always pay the average $1, either to the collection agency or their phone company.

  • $1 multiplied by 3 million victims or scams = $3 Million, annually.

  • In addition, we must consider the time spent by all victims in reading the intimidating collection agency letter or credit card statement and the disputing process. Even if we assume every victim only spends a total of 1 hour, at $10 per hour, this equals $30 Million (= $10 X 3 million people).

Adding the last two points above, we get $33 Million, annually. This is not a very large dollar amount, but can we put a price on the trees killed for all the papers mailed? More importantly, the stresses to the victims cause:

  • A shortening of their life spans.

  • A percentage contribution to stress-related diseases and its medical costs.

Considering all this, our society should at least try and deter these types of scams by accounting middle managers. We should convince our governments to legislate laws for more severe punishments for anyone caught in the act. Certainly a slap on the wrist is not enough to deter these types of scams. It may be financially beneficial for these collection agency companies to simply pay small penalty fines and continue perpetrating this scam. In addition to bigger fines, to protect the public from further harm, the minimum punishment should include:

  • Permanently revoking CPA (Certified Public Accountant) licenses for the individual middle managers.

  • If the CEO is found to be complicit, he or she should be denied incorporation ever again in all states.


Lobbyists would have a hard time trying to oppose this without admitting that their client companies must have a need to oppose it. Pubic prosecutors can use the lobbyists’ client list to investigate these companies, who by virtue of being on the list are most likely guilty.


The broad effects which can be obtained by punishment in man and beast, are the increase of fear, the sharpening of the sense of cunning, the mastery of desires; so it is that punishment tames man, but does not make him 'better'.” - Friedrich Wilhelm Nietzsche, “Genealogy of Morals” [1887], First Essay, Aphorism 9.


Fear of punishments might deter this unscrupulous behavior. But we also need preventive solution strategies. For example, we could increase emphasis on teaching ethics in business schools and CPA testing with examples like this incident, and also further emphasize business ethics as a required subject for the accreditation of business schools.

       Web Site: Silver Parachutes book

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