| Published Spring 2014
Q: I would like to send my young children to a backyard camp during the summer. The camp is offering an ‘early-bird special’ if I register my children now. If I wait until the summer to register, they will charge more. Is there any ribbis issue with registering now and receiving the discount?
A: Ribbis involves lending money to another Jew and charging interest. Doing so may violate a Torah prohibition or a rabbinic prohibition, depending upon the situation. If it is necessary to charge interest, the two parties may sign a document known as a “heter iska”, which converts the loan into a business investment, thereby avoiding the prohibition of ribbis.1 People are often unaware that a number of common transactions may violate the prohibition of ribbis. Here are a couple of examples:
(1) Reuven buys an item with Shimon’s credit card, and assures Shimon that he will pay the credit card bill. However, Reuven forgets to pay the bill on time, and the bank charges interest on the money owed. The following month, Reuven would like to pay the full amount owed. However, Reuven realizes that, when he bought the item with Shimon’s credit card, the bank was really lending the money to Shimon, and it was Shimon who in turn lent the money to him. When he pays the bank, he is really paying Shimon, who in turn is paying the bank. As there was interest accrued, he would be paying Shimon that interest, which would be ribbis. Therefore, Reuven tells Shimon that he is unable to pay the interest owed, and Shimon will need to pay the interest owed to the bank. Even though Shimon was generous enough to allow Reuven to use his credit card, and Reuven failed to pay the bill on time, it is Shimon who will need to pay the interest to the bank in order to avoid the prohibition of ribbis.2
(2) Reuven would like to buy a modest house for his young family. However, he is not old enough to have a long credit history and the bank is unwilling to give him a mortgage. Reuven’s father, Yaakov, consequently takes out the mortgage in his own name with the intent that Reuven will live in the house and pay the mortgage bills. Once again, the bank is effectively lending the money to Yaakov, who is in turn lending it to Reuven. When Reuven pays the bill, he is really paying Yaakov who is then paying the bank. The bank which extended the mortgage is charging interest, and Reuven will be violating the prohibition of ribbis. Reuven should, therefore, write a heter ska with his father at the time that the bank initially gives the mortgage.3
Let us now return to your question. There are a number of reasons why a camp may offer you an early-bird special. (i) The people running the camp may need money now in order to prepare for the camp. They need to buy the supplies and rent facilities. They are offering you a discount so that they have the money readily available, even though they will not be providing the service until the summer; (ii)The people do not want to commit themselves to running a camp all summer unless they know that there will be interest in the camp. In effect, they are paying you for giving them this peace of mind; (iii) The people running the camp know that, psychologically, people are more likely to spend money if they perceive that they are getting a bargain. Offering an early bird special is merely a marketing tactic.
Whether the early bird special is a ribbis issue may depend upon the reason that it is being offered. If it is for the first reason noted above, the camp is offering a discount so that you will pay them immediately and receive the service later, and you are effectively lending them the money until the summer. The true value of the camp is the non-discounted full price, and you are receiving a discount because of the loan; you are gaining from the loan, which is ribbis. However, if the early bird special is being offered because of the second or third reason previously mentioned, the people running the camp have no need to borrow money from you. They would be equally happy if you put the money in an envelope and told them not to open it until the summer. Consequently, this would not constitute ribbis. Therefore, whether or not the discounted price is ribbis would depend upon the reason why the camp is offering the early-bird special.
When a person runs a camp and offers a discount for early enrollment, he himself may not be entirely clear as to the motivation for this. It is possible that, to some extent, all of the three reasons previously mentioned apply. Therefore, Rabbi Heinemann, shlit”a, suggests that camps avoid this type of advertising. If the camp does not call the discount an ‘early-bird special’, but merely advertises one fee for early enrollment and a larger fee for late enrollment, and the fee for early enrollment is equivalent to what similar camps charge, we can consider the early enrollment fee as the true value of the camp and the increased price of late enrollment as a penalty fee. As the person who enrolls early is paying the true value of the camp, this would not constitute ribbis.4
1. נוסח שטר היתר עסקא –
2. עי’ בשו”ת אגרות משה יו”ד ח”ג סי מב וסי’ צג, ועי’ בספר משנת ריבית פי”ז סעי’ ז מה שצידד בזה הובא בקצרה בהליכות ישראל על הל’ ריבית פי”ז הערות 28-29, ועי’ בחלקת בנימין על הל’ ריבית סי’ קע ס”ק יז
3 עי’ בשו”ת שבט הלוי ח”ז סי’ קמא ובשו”ת אגרות משה יו”ד ח”ג סי’ מב ובספר משנת ריבית פי”ז הערה י’
4 שמעתי ממו”ר ר’ היינעמאן שליט”א