WhiteFlowers4You sells flower arrangements over the Internet. Recently the company has been experimenting with accepting digital cash. At first, the introduction of digital cash brought an immediate 10% increase in sales, and everyone in the company was pleased. Problems began to occur, however, with some of the digital cash notes received. In one day, a week ago, 20 notes, each denominated in the amount of $20, turned out to be counterfeit. The bad notes were received from different customers, but in each case, the flowers were being sent to someone as a gift. Further, in every case, the flowers were shipped the same day that the order was placed. It was not until the next day that the bank refused to pay the digital notes. To make things worse, all the notes turned out to be blinded digital cash, so the bank could not provide any information on the maker. Further verification showed that in every case the customer had entered a false name, address, and telephone number. In short, there was no easy way to find out who had perpetrated the frauds. The controller argued strongly for contacting the recipients of the flowers to ask questions about who had made the false purchases. But the CEO was against this, as she felt that to make an issue of it would produce bad customer relations and possibly bad press. The last thing the company needed was bad press. While the controller and CEO were debating what to do, the treasurer popped in and said that they had just discovered another 120 bad notes for $20 from only the day before.


a. What should WhiteFlowers4You do about its problem with bad digital notes? Design a solution to the problem.

b. Should the company contact the recipients of the fraudulent orders? Explain why they should or should not.

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