One of the most ignored pieces of advice in financial education is “always read the fine print in contracts”. We almost never do. And it’s something we’ve come to treat as normal. You’re signing up for some online service, you can’t continue unless you accept the terms, and you’re faced with 15 pages of terms and user agreements, sometimes more. So you scroll to the bottom and tick the box that says “I confirm I have read and accepted the terms”.
The problem is that many of those “fine print” sections are there for a reason. Often for our protection, and in other cases to our detriment if we don’t read them. In fact, if people had read Facebook’s terms and agreements and taken them seriously, I doubt anyone would have opened an account on the social network.
Many users don’t know that the fine print in documents helps them protect their assets in the event of identity theft. In other cases, we’re not aware that the fine print includes insurance that would pay us a certain amount of money if certain things happened, and we don’t claim it because we don’t realise the option was there. And most commonly of all, a company does something we consider unfair to us, but it was something they had already told us they could do. They told us in the fine print, so a judge would rule in their favour if we took the company to court.
The experiment that rewarded reading the fine print
Some companies wanted to test whether people read the fine print in their contracts, as everyone is advised to do.
Squaremouth, an insurance company in Florida, set out to show that people didn’t read the fine print in contracts, and to show how important it is to do so. So it launched a secret campaign.
In 2019, Donelan Andrews, a 59-year-old teacher from Georgia, took out a policy with the company and decided to read the fine print of that lengthy contract. Somewhere in those 10 or so pages she came across something strange. The paragraph said there was a contest under way, and that if she was reading it, she probably belonged to the 1% of people who actually read the fine print in contracts, so she was eligible to enter a contest in which she could win $10,000. The terms of the contest said the $10,000 would go to the first person to send an email to the address given in the contract. Naturally, that caught Andrews’s attention.
She sent the email and, sure enough, she was the winner. The insurance company had sold 73 policies on the day the contest took place. She was the only one to send that email, in other words, the only one who read the fine print. And so she was the one who won the $10,000.
When the insurance company found out the winner was a teacher, it donated an extra $10,000 to the organisation Reading Is Fundamental. It also donated another $10,000, split between the two schools where Andrews taught.
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Because one person read the fine print, the insurer paid out $30,000 in total: $10,000 for her and another $20,000 to charitable causes.
When she was asked whether she had thought it might be some kind of scam, she said flatly that she hadn’t, because she herself, as a teacher, had done something similar more than once in her students’ exams, to reward those who actually read the material she gave them.
The lesson from this story: a smart consumer always looks out for themselves, and reading the fine print is looking out for ourselves. In this case it paid $10,000, but what if, instead of offering a benefit, it had held a penalty? Read the fine print.
Featured image: Niabot, CC BY-SA 3.0, via Wikimedia Commons.
