Doing Business | Sales & Marketing

September 14, 2016

15 Simple Mistakes That Cost Millions Of Dollars

Aside from health, money is without a doubt the most important thing in life, because without it we would not be able to pay for housing, education, healthcare, or transportation; and we would also not be able to buy food, clothing, or medicine.

For most people, their goal is to make as much money as possible in order to support themselves and their families; and in the case of businesses and corporations, they are solely focused on the bottom line: profit. With that being said, whether it is an individual, a business, corporation, or the government, no one likes to lose money, especially if it happens because of a mistake.

To be fair, no one is perfect, and everyone makes mistakes of various degrees on a daily basis, it is just a part of being human. In most cases, when a mistake is made in school, or in someone’s personal life, it can be fixed with minimal collateral damage, but when it comes to work and dealing with money, there is supposed to be virtually no room for error, because almost every mistake that causes a financial loss in any way is usually permanent and unfixable. It is true that there have been instances where big mistakes have led to millions of dollars being lost, but there are also cases in which simple mistakes, primarily punctuation and grammatical errors, that have come with a million dollar price tag. Here is a list of 15 simple mistakes that cost millions of dollars.

15. Department of Education’s Bookkeeping Error

Of all the entries on this list, this one is without a doubt the most ironic of them all. We all know how important education is, as it helps to cultivate and develop a child’s mind, while also providing individuals with credentials and a pathway towards the profession of their choice, and it is up to the people who run the educational system to provide schools and students with the things that they need. The New York City Department of Education manages all of the public schools in the city, which is the largest school system in the U.S. This department gets an annual budget of around 25 million dollars, as it has to provide services for over one million students, services like transportation. In 2006, a New York City comptroller made a very costly typo when he added an extra letter to a word, which caused the computer’s accounting software to misinterpret a document regarding the Department of Education’s transportation budget. This mistake caused the department to spend double on their transportation budget, which ended up costing an additional 1.4 million dollars. 

14. The Chilean Currency Mistake

Everyone around the world uses some form of legal currency, whether it is the U.S. dollar, the Japanese Yen, the British Pound, the Indian Rupee, the Chinese Yuan, the Euro used by The European Union, or one of the other currencies used in certain regions and countries. In 2016, most transactions involving currency are done electronically and digitally with the use of credit cards or bank issued cards, but plain cash is still used as well, which is why governments continue to produce physical currency in the forms of “paper” money and coins. It actually costs a lot to produce currency, and if by chance there is a mistake made anywhere on the currency, it would no longer be considered legal tender within the country, which would effectively eliminate an entire year’s worth of issued currency if it were ever actually released to the public. That is exactly what happened in Chile in 2008, when the Chilean Mint misspelled the country’s name on their 50-Peso coins. “Chiie” not “Chile.” This mistake was not officially reported until 2009, and despite the Chilean government not taking them out of circulation, the people effectively  did.

13. Rogers vs Bell

For those unfamiliar with the Canadian telecommunications landscape, there are basically two companies which run the entire sector, and those companies are known as Bell Aliant and Rogers Communications. These companies may be bitter business rivals, but there are times when even rivals get together to make deals, and it was their different interpretations of a comma that led to a legal battle between the two which ended up costing a combined one million dollars in legal fees. Both companies entered into a five-year deal, which stated “This agreement shall be effective from the date it is made and 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.” Bell believed that the second comma in that section meant that either company could cancel the contract at any time with one year’s notice; while Rogers believed that the contract would last the full five years, and could then be cancelled after a one year notice. Ultimately, the courts sided with Rogers, but this is just one example of how punctuation can cost people a lot of money.

12. The Wrong Lottery Ticket

This list entry is actually a very satisfying one, especially when you take into account how much money lotteries make when people buy tickets in an attempt to win a life changing jackpot. In January of this year, a grocery store clerk in Virginia named Michael T. Donnelly, was lucky enough to win 7 million dollars from the jackpot of the Cash4Life lottery. What really makes this lottery win lucky, is the fact that the only reason he had the ticket in the first place was because of a mistake he himself made when dealing with a customer. As it turns out, a customer wanted to buy Powerball tickets, but Michael pressed the wrong button, producing the Cash4Life ticket instead; the customer did not want the ticket however, so instead of simply throwing it out, Michael decided to buy it for himself, and the rest as they say is history.

11. Pepsi’s Chinese Blunder

Usually, for a product or business to become very successful, there needs to be a fairly good amount of marketing applied in order reach as many consumers as possible, which is why there are always advertisements during tv shows and sporting events. Marketing, costs a lot of money, and in regards to massive, global corporations, they spend millions of dollars in advertising their products. Pepsi is considered to be one of the most popular soft drinks in the world, and in the 1960s, PepsiCo launched a new marketing campaign for Pepsi in China, a campaign which cost the company a hefty sum. At the time, Pepsi’s slogan was “Come Alive With the Pepsi Generation”, and it was the same slogan that the company decided to use in China, but apparently the marketing team did not think to check the Chinese translation of the slogan before making it public. In China, the slogan was translated into, “Pepsi brings your relatives back from the dead”, which in Chinese culture, is a terrible statement to make, and as a result, the company lost millions in advertisements and sales.

10. Typosquatting

We all use the internet, usually to search for things, which is why search engines like Google exist to make things easier, and those search engines can receive a lot of daily traffic, which is why advertisers pay them huge sums of money to promote specific products. There are times though when people accidentally misspell the word or website that they are searching for, and as it turns out huge companies like Google, actually lose millions of dollars every year because of simple typos and typosquatting. Typosquatting relies on people making typos when typing a web address into a browser, and when these people press enter, they are brought to a different site that is filled with advertisements. The reason why Google loses so much money every year, is because there are several sites that possess misspelled variations of Google, and when someone visits one of these other sites, Google subsequently loses ad revenue.

9. Coors Translation Blunder

Two entries ago, it was mentioned that marketing is an important tool to help promote and sell a product, and even though you might think that there is no real reason to have to market beer, you would be wrong, because it is actually a very competitive business to be in. The Coors Brewing Company is a part of the world’s seventh largest brewing company, and it has been around for almost 150 years now, with its most well known product of course being Coors beer. During its overseas marketing campaign, Coors continued to use the slogan “Turn It Loose”, and had it translated into Spanish, which was where things went wrong for the brewery, because just like with Pepsi, the Coors marketing team did not notice what the slogan translated into before making it public. Apparently when translated, the slogan in Spanish reads, “Suffer From Diarrhea” which at the time obviously did not help to sell beer, causing the company to lose millions in sales and marketing costs.

8. The Yellow Pages One Letter Mix-up

Today, everyone has a phone in the palm of their hand, and if you want to actually call someone, it usually only requires you to tap the screen a few times. Before everyone had a cell phone, the main way that people were able to call and communicate with each other, was through the use of a landline phone which needed to be situated in one specific place. Today, if you need to call a business, repairman, or restaurant, you just use the internet on your phone to find the number you need, but in the predominant years of the landline, you had to use the Yellow Pages which were found in a big, heavy phonebook. Yellow Pages was also used to promote businesses like travel agencies, one of which was the California-based agency known as Banner Travel Services who paid for printed advertisement. The advertisement was supposed to mention the agency’s specialization in exotic travel, but someone at Yellow Pages accidentally wrote it as erotic travel. The result of this was Yellow Pages being sued for gross negligence, which ended up costing the printer 10 million dollars.

7. Another Comma Mistake

Throughout the history of the United States, and most other countries, there have been trade deals agreed upon which include some sort of tariff. A tariff is a tax affixed to imported goods and services, which is actually meant to restrict trade in order to make the price of those goods and services more expensive for consumers. In 1872 the U.S, government passed The Tariff Act which was supposed to get rid of the tariffs on “fruit-plants, tropical and semi-tropical for the purpose of propagation or cultivation.” Unfortunately, the person who wrote the bill placed a comma in a place it did not belong which caused the bill to instead read “fruit, plants tropical and semi-tropical for the purpose of propagation or cultivation,” which meant that no one importing fruits would have to pay any kind of tariff. The result of this mistake? Importers refused to pay tariffs even though the U.S. government still wanted them to, which led to multiple lawsuits, and the U.S Treasury eventually having to refund the importers a total of 2 million dollars (which is equivalent to 40 million in today’s currency).

 6. Scratch Ticket Debacle

Most of the time, when a person goes out to buy a new car, they go to a car dealership in order to get one that they believe works properly and possesses no form of damage. Dealerships have actually been around since the very late 1800s, and since then, dealers have tried every kind of promotional tool available to get people to come and buy cars from them. In 2007, a car dealership in Roswell, New Mexico, tried to boost their sales numbers by mailing out 50,000 scratch tickets to local residents. There was only supposed to be one official winning ticket that paid $1,000, but the marketing company in charge of producing the tickets mistakenly made every ticket a winner, which forced the dealership to have to pay residents 50 million dollars. The dealership was unsurprisingly unable to carry out such a payment, so instead they offered every winner a $5 Walmart gift certificate.

5. Lockheed Martin’s Comma Mistake

Some of you may have heard of the name Lockheed Martin, but for those who have not, it is a multi-billion dollar company that specializes in aerospace, security, defense, and advanced technologies. It is considered to be the largest defense contractor in the world, and in the late 1990s, the company signed a contract to produce C-130J transport aircrafts for the airforce of a still unknown country. A group of aircrafts like that actually take years to properly build, so included in the contract was a formula which adjusted for inflation to adequately gauge the overall price of the planes. The problem though, is that Lockheed Martin messed up the formula by placing a comma in the wrong place in their calculations, which caused the price of the planes to rise significantly lower than the inflation rate. The country that ordered the planes forced Lockheed Martin to honor the contract as it was written, and as a result the company ended up losing around 70 million dollars.

4. NASA’s Hyphen Mishap

This list has showcased just how important punctuation is, especially in regards to the placement and usage of the comma, but in this entry, you will see that a hyphen can also lead to the loss of millions of dollars. In 1962, NASA launched the Mariner 1 spacecraft which was supposed to be America’s first interplanetary probe, and its mission was to visit the planet Venus, Probes like this require very specific coding in order function properly, and unfortunately for NASA, someone forgot to place a hyphen somewhere in the probe’s coding for trajectory and speed, which caused the probe to explode only a few minutes after it launched. A few weeks later, NASA sent a different probe to Venus, but the fact that Mariner 1 exploded, effectively meant that 18.5 million dollars (almost 150 million in today’s money) literally went up in flames.

3. A Company Destroyed By An “S”

There exist companies all over the world that have been operating for over one hundred years, and even though they have longevity, it is still possible for such companies to shut down for a variety of reasons, including stupid ones. Taylor & Sons Ltd was an engineering company in the United Kingdom that had operated for 124 years until it financially collapsed in 2009 because a government employee unnecessarily pressed S on their keyboard. In the U.K. companies must register with a government agency known as Companies House which keeps records of corporate information like financial statements. In 2009, the agency declared that Taylor & Sons Ltd had closed, even though it was still very much open for business, but the agency’s declaration still caused orders and contracts to be cancelled, and also caused suppliers to stop offering the company credit. As it turns out, a different company known as Taylor & Son was supposed to be declared closed, but someone inside Companies House accidentally added an S to the end of the name. This resulted in Taylor & Sons Ltd, a company that in 2009 was valued at over 11 million dollars, to permanently shut down.

2. Juan Pablo Davila

At the start of this list, we talked about Chile losing millions in released currency because of a spelling error on a coin, but that is not the only mistake that caused the Chilean government to lose millions of dollars. In 1994, a former copper trader named Juan Pablo Davila was working for a government owned company called Codelco, and one day while the stock market was open, he bought stock that he was actually supposed to sell. To rectify this mistake, Davila for some reason went into a trading frenzy, and by day’s end, he bought and sold stocks in such a terrible way that his company ended up losing 175 million dollars. Unsurprisingly, Davila was fired because of this, and even though this mistake took place when online trading was still relatively new, there is no excuse for losing THAT much money; which is why this blunder led to the creation of the term “Davilar”, which in the trading world, is used to describe a massive screw-up.

1. Mizuho Securities

Mizuho Securities Co., Ltd is a Japanese investment banking and securities firm which is a part of Japan’s second largest bank, and they take the top spot for losing millions because of a very simple mistake. In 2005, the firm added the recruitment company J-Com Co., Ltd to their economic portfolio, and when one of their traders went to sell some of the new acquisition’s shares on the Tokyo Stock Exchange, he made a simple yet monumental mistake. The trader was supposed to sell one share for 610,000 Yen, but instead, thanks to a typo, he sold 610,000 shares for just a single Yen. Now, you do not have to be good at math to know that that was a huge and terrible blunder, which it was, because as a result of that typo, Mizuho Securities ended up losing approximately 340 million dollars in just one day.

 

Text by The Richest
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