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Trust Funds

More and more companies are adopting the honor system when it comes to accepting payment, an approach that works extremely well-except when it doesn’t

Author Cristina Rouvalis Illustration Sébastien Thibault

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Despite its name, Honest Tea doesn’t really claim to be morally superior to its competitors. Occasionally, though, the organic beverage company does put its customers’ integrity to the test: Every summer for the past six years, Honest Tea representatives have traveled around the U.S. setting up unmanned “Honesty Boxes,” and people are asked to leave a dollar for every bottle they take.

Part marketing campaign, part unscientific social experiment, it has yielded results that are heartening to those who believe in the underlying goodness of humanity. On average, about 94 percent of the people who take a bottle of tea pay up in full, according to a company survey.  

“There are a lot more honest people than you think,” says Seth Goldman, co-founder of the Bethesda,  Maryland–based company, which generates annual sales of $159 million at 100,000 U.S. stores—where, it should be noted, payment is not optional.

Conducting commerce on an honor system seems like a quaint notion from a bygone era, when hotel minibars didn’t have sensors and clothing retailers didn’t use security tags. But there are still some things that run on trust, such as the self-service cupboards at Candlewood Suites, where guests are invited to jot down what they take on a slip of paper.

While some visitors are tempted to pull a fast one on the extended-stay chain, others round up their tally because they don’t have exact change. For Candlewood, however, the nickel-and-dime stuff is beside the point. The aim is to generate goodwill rather than boost the bottom line. “We want people to feel comfortable, as if it’s their home and they could go into the fridge and get an ice cream bar,” says Shannon Rizzo, director of sales at the chain’s Pittsburgh Airport property.

Swanton Berry Farm, in Davenport, California, takes a similar approach. It has annual sales of around $550,000, a good deal of that dropped into an unattended farm-stand cash box. “Occasionally, someone grabs $50 out of the till and leaves,” says Jim Cochran, founder of the business. “Some people say, ‘I can buy strawberries at Safeway for $3 a basket and here they charge $4. I am only going to pay $3.’” Mostly, though, customers are tickled that they are being trusted to pay for fruits, pastries, and jams. “People from New York City cannot believe it,” Cochran says. “They have their pictures taken in front of it.”

Similarly, the Vault coffee shop in Valley City, North Dakota, claims it “may be the world’s only unmanned self-service coffee shop.” Co-owner David Brekke stocks merchandise in the morning and leaves the rest to fate as  he heads to his hands-on job as a corporate consultant. Not only do his customers pay, he says, but on average they  pay 18 percent more than the asking price.

Which is not to suggest that business owners should fire their staffers, set up a cash box, and wait for the profits to come rolling in. Brekke, for one, insists he won’t get rich from his scheme. “People may get one coffee and stay all day,” he says. And that’s OK. Brekke opened the shop not as a cash cow but as a community center, a place where people could gather for game nights and local theater performances. 

It’s a good thing for Brekke that he’s not motivated by profit. After all, there’s only so much better nature to go around (see where leaving a rack of Rolexes by the side of the road gets you). “Most people think of themselves as honest human beings,” says Nina Mazar, associate professor of marketing and behavior science at the University of Toronto. “The thing is, when there is a temptation to cheat, we usually give in a little and rationalize.” 

Some firms, meanwhile, have taken the honesty-pays approach even further, not only trusting customers to pay a fixed amount but letting them decide what that amount should be. The Pay What You Want (PWYW) model has been used in everything from coffee shops to business consultancies, with varying results. The most famous instance was in 2007, when Radiohead let people download the album In Rainbows with no fixed price. The band was rewarded with reported sales of around $10 million and even more adoration from its fans. 

On a more modest scale, Donna Selle, owner of the People’s Clinic, an acupuncture facility in Boise, Idaho, allows people to pay for certain treatments on a sliding scale, a tack that helped her gross $120,000 in 2013. “I am in the black,” she says. 

For every success, however, there’s a resounding failure, such as Brooklyn’s Santorini Grill, which adopted the PWYW model in 2011 and closed down four months later. Then there’s the Five Loaves and Two Fish restaurant in Fuzhou, China, which in 2013 reported losses of about $40,000 on its PWYW scheme. “In my eyes,” the owner said at the time, “those who don’t pay are sick.”

To avoid such a fate, some honesty-based enterprises have resorted to mind games, such as pasting images of human eyes close to a cash box—which, according to a U.K. study, triples the amount people put in. 

Of course, real eyeballs are an even bigger incentive.  Passengers boarding the light rail system in Denver (as in many other cities around the world) don’t pass through a turnstile, but they’re expected to show their ticket if approached by transit police. According to official figures, only 3 to 4 percent of riders evade fares. “Most people are honest,” says spokesperson Tina Jaquez, though she allows that the prospect of a $100 fine may also encourage passengers to do the right thing.

Pittsburgh-based writer Cristina Rouvalis has never drunk a can of soda from a hotel minibar and then replaced it later with a cheaper store-bought can. Ever.

2 Responses to “Trust Funds”

  1. Curt Tigges Says:
    March 3rd, 2016 at 7:02 pm

    This brings to mind the stores and restaurants here in Taiwan, where I'm now living. I was surprised to see how easy it would be to leave without paying for your food or items in most stores. And yet, even though nobody would notice if you just left after eating your food, everyone pays. I think there's a human instinct to trust your community, unless you've had too many negative experiences. People here even leave their bikes unlocked everywhere, or leave their bags at a table at a cafe–all, seemingly, without fear of theft.

    I think that most of the time–despite cases where people take advantage of the system–being trusted by a company to pay yields dividends in terms of reputation and customer relationships that make it worthwhile.

  2. Odette Essary Says:
    March 30th, 2016 at 8:52 am

    I've been to Swanton in Davenport and I love it! I go every year at least 3 times because their baked goods and berries are top notch. I am a baker and I am so picky about buying baked products but this place is amazing and also I love that they use the honor system, it's a feel good experience. They also have a U-Pick berry farm down the road, great family fun and fresh, delicious organic berries.

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