Just file it under “oops” (7 costly clerical errors)
Everybody makes mistakes. I have been known to make a few here and there, or so I’ve been told. It still pains me to look at my NCAA Tournament bracket. But I’m not alone. Smart people make little mistakes all the time. Even Google was technically a mistake. (It was supposed to be “Googol”, what they thought would be short for googolplex)
That mistake, however, did not result in the loss of millions of dollars. Quite the opposite. But some simple errors have led to some very expensive consequences. Whether it’s a typo, misspelling, or simple forgetfulness, the following clerical errors ended up with a heavy price tag.
And I thought Southwest had the best fares…
Alitalia Airlines is a carrier out of Italy that made a slight mistake on its website in 2006 regarding a fare from Toronto to Cyprus. The fare advertised was $39. It was supposed to be $3,900. The rate was posted on a travel website and the rush was on. As many as 2,000 tickets were sold for this price.
While Alitalia initially tried to cancel all the tickets purchased for the wrong price, they eventually decided to honor the mistaken fares. If all 2,000 people actually used their tickets, it adds up to a $7.72 million loss to the airline.
Punctuation is important
Despite text messaging and Twitter completely destroying the English language one poorly constructed run-on sentence at a time, punctuation can still make or break a deal. In Canada, Aliant Inc. had a contract with Rogers Communications to install about 90,000 utility poles. They signed a contract and the installation began. But soon, the construction of a sentence in the 14 page contract caused an 18 month legal battle.
Rogers Communications thought they had an ironclad five year contract with Aliant. However Aliant, being the grammar police that they are, saw it differently. They cited this sentence:
The agreement “shall continue in force for a period of five years from the date it is made, and thereafter for successive five-year terms, unless and until terminated by one year prior notice in writing by either party.”
Had the second comma not been there, Aliant would have had to honor the first five years of the contract before anything could be changed. But because of the comma, Aliant cancelled it early and almost tripled their prices, costing Rogers Communications $2.13 million.
Bad day for a day trader
In 2006, an broker for Mizuho Securities in Japan wanted to sell off a share of J-Com stock. The price he wanted? ¥610,000. So he entered it into the system and then noticed something slightly off. He realized that he told the system to sell 610,000 shares for ¥1 each.
Officials at Mizuho contacted the Tokyo Stock Exchange to attempt to halt the sale, but were unsuccessful. The error cost the securities company approximately $340 million U.S.
And Aloha means goodbye
The state of Hawaii was already facing a budget deficit in 2009 when they took another hit. It seems that their fiscal year for one of the departments did not end with the $8 million surplus they initially thought, but instead a $36 million deficit. Because of a clerical error in the state accounting department, the $44 million collected as part of a delinquent tax program was counted twice.
Before the error was realized, the state did what every other government agency would do with a sudden influx of cash: they spent it. After the money was spent, the error was found and the budget deficit reported.
Get out while you still can
A 41-story New York condominium development may not have sold as well as they thought. Many people paid a lot of money for some of the condos at The Rushmore in early to mid-2009, but the properties were already worth less than what they paid. Several of them went looking for a way to back out of the sales without losing their deposit. They may have found it.
It seems that the contracts given to the buyers left an out clause if the first closing did not occur on time. That time was supposed to be September 1, 2009. In the contract, the listed date was September 1, 2008. The first closing was not until February 2009. The end to this one is not yet known, but it could cost the development company tens of millions of dollars.
That’s a lot of buses
In 2006, the New York City Department of Education made a mistake in their bookkeeping. Apparently, there was a misspelling that had a word with one extra letter. This word was not readable by their accounting system and, somehow, that system decided to therefore spend twice as much on transportation. That year, $2.8 million was spent instead of the budgeted $1.4 million.
The city had to come up with the money to replace it. And much like the Hawaii thing, it amazes me that nobody noticed this. If you were working somewhere and all of a sudden your budget doubles for no apparent reason, wouldn’t it be a good idea to bring it up at the next meeting?
Ignore court orders at your own risk
This is the one I read about that gave me the idea for this post. Luckily for Pepsi, the ruling was thrown out recently. But it could have been really bad. You see, a couple guys were suing Pepsi over what they said was their idea about the way Pepsi produces Aquafina water. They said they went to Pepsi with an idea, Pepsi said no, and then started using it anyways several years later. The lawsuit was served at the company’s headquarters in North Carolina but took a while to get through the corporate chain to the legal department. An employee misplaced the paperwork and Pepsi missed the court date. The judge was not impressed.
The men were awarded a judgement of $1.26 billion. They were happy for a while, but then the judgement was thrown out and a trial ordered. Time will tell how much cash the men may end up with.