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MONEY MATTERS

Laws of Interest #11

Q: Is there a ribbis problem is receiving a discount for a yearly subscription to a magazine or in buying a discounted bus ticket for multiple rides?

A: Some authorities prohibit a subscription discount, on the grounds that it is a prohibited prepayment discount (discussed last week). However, it is possible to permit the arrangement for the following reason:


Prepayment discounts are prohibited only when the discount is explicitly linked to the prepayment or is clearly due to the available usage of the customer's money. However, when the discount is not explicitly linked to the prepayment and can be attributed to other reasons, it is permitted.


In the case of the subscription, the discount can easily be attributed to the customer's commitment to purchase the magazine for the entire year. Similarly, the discount of the bus ticket is understood as an incentive to ride the bus on a regular basis or a means of saving the driver the hassle of receiving a fare each time. A bus ticket may also be considered yesh lo (having in stock), since the company can provide all the rides immediately. Therefore, purchasing the subscription or bus ticket at a discounted price is not a violation of ribbis.


However, if the subscription offer explicitly states, "Subscription price is contingent on prepayment in full," or, "Pay for a year and save 45%," this would be a problematic prepayment discount, as discussed last week. (Bris Yehuda 23:7(20); The Laws of Ribbis, 7:23,8:24)