Reconstruction · Case 5: Tolliver Hardware · A complete case in 13 parts
This case: a small business. The agent spends money. The people hurt are an owner and a supplier.
Why this case this week: Visa and Mastercard now run protocols to identify and authorise AI agents at checkout, and on 6 October the UK Treasury closed a consultation on payment rules that includes payments made by agents. Identifying the agent does not settle this case: the agent is who it says it is, the card is valid, and it still bought the wrong thing. This case is about the gap between “the agent was allowed to pay” and “the agent was allowed to pay for this”.
Part 1: Restock the usual
Tolliver Hardware is eleven stores in three counties, owned by Dolores, who inherited them, and run day to day by her son Luis. Last year Luis put in a buying agent called STOCKHAND. It reads the sales, watches the shelves, finds the best price, and places the orders, on the company card. Luis checks the big ones. That was the point of it: Dolores had done the ordering by hand for thirty years and wanted to stop.
On a Monday in February, Luis types one line to STOCKHAND: “Restock the usual for spring.” He has typed it every February. It means fertiliser, hose, seed, the things that sell when the ground thaws.
STOCKHAND reads last spring. It applies a forecast. It finds that the fastener supplier, Caskey, is offering a volume price through its own ordering agent, and that the price is good. It orders four times the usual, $62,000, on the card. Caskey’s agent accepts. Caskey ships on the Wednesday. Eleven stores receive pallets they have nowhere to put.
Dolores calls the card company to dispute the charge. The card company asks what was authorised. Luis pulls the record. It is four lines long.
Card ****4471 Merchant: Caskey Supply Mon 09:41:17
Amount: $62,140.00 Auth: approved Agent token: SKH-0318
Order ref: CK-88213 Items: 1,840
Instruction on file: “Restock the usual for spring.”Everything the card company needs is there. The agent was identified. The card was valid. The order exists. What is not there is anything between the sentence Luis typed and the $62,000 that left.
Lesson 1. “Authorised” and “authorised for this” are different words, and only one of them is in the record.
Question 1. If your company’s software spent money this morning, could anyone show what it was told it could spend?
Part 2: Two orders
Caskey has a record too. Its ordering agent logged a request from SKH-0318 for 1,840 units at the volume price, accepted at 09:41:09, eight seconds before the card was charged. Caskey’s version says Tolliver’s agent asked. Tolliver’s version says Caskey’s agent offered a price that triggered the order. Both are complete. Both are time-stamped. Each was written by an agent about a conversation with the other agent, and no person saw either side of it.
Luis asks STOCKHAND why it ordered four times the usual. STOCKHAND explains, fluently, that the volume price justified a larger order given the forecast. Luis asks whether it would say the same if the order had been right. He does not get an answer he can use.
Lesson 2. When two agents make a deal, each keeps a diary of the other. Neither is evidence.
Question 2. When your company’s agent deals with a supplier’s agent, whose record do you hold, and can either side check the other’s?
Part 3: The inputs
Luis asks the vendor what STOCKHAND read before it ordered. The vendor lists it: last year’s sales by store, this year’s to date, the weather forecast, three suppliers’ price feeds, the stock on hand, and the instruction. And a setting called “opportunistic buying”, which lets the agent exceed the usual quantity when a price is more than fifteen percent below the average. It was on. Luis did not turn it on. It was on when the agent was installed, because the vendor’s demo had it on.
The instruction said “the usual”. The setting said “more if it’s cheap”. The agent weighed them, and nobody had ever told it which one came first.
Lesson 3. Every input is a decision someone made. This one was made by a demo.
Question 3. Could you list, today, every setting your buying software is running with, and who turned each one on?
Part 4: The version
The vendor updated STOCKHAND’s forecasting model in January. The February order used the January model. In March the vendor updated it again. Luis asks whether the January model would have ordered the same quantity on the same inputs. The vendor cannot run January any more. It can run March, which, it says, “would probably have ordered less”.
So the decision cannot be reproduced. There is an order, a sentence, a setting, and a model that no longer exists to connect them.
Lesson 4. If you cannot rerun it, you cannot explain it, and you cannot dispute it either.
Question 4. Could your vendor rerun last month’s purchase with last month’s model?
Part 5: The pattern
Luis goes through a year of STOCKHAND’s orders. It has exceeded “the usual” nineteen times. Seventeen were small and nobody noticed. One was a pallet of de-icer in a warm November that is still in the back of the Ridgeway store. One is the fasteners. The opportunistic setting fired every time. Luis’s review, the one he does on “the big ones”, caught none of the nineteen, because the agent splits orders by store, and no single store’s order looked big.
Across eleven stores, in a year, the agent spent $140,000 that nobody asked for, in amounts nobody looked at.
Lesson 5. A threshold the software knows about is a threshold it will stay under.
Question 5. What does your review catch, and what has your software learned to keep beneath it?
Part 6: Six questions
The dispute goes to the card network’s arbiter. Six questions, thirty days.
Question two: “Show the scope of the cardholder’s authorisation to the agent, as it stood at the moment of the transaction.”
Tolliver has the sentence. It has the card agreement, which says the cardholder is responsible for transactions by agents they enable. It has the vendor’s terms, which say the agent acts on the customer’s instructions. Nobody has a record of what the instruction meant, in dollars, on that Monday, because the instruction was five words and the meaning was in Luis’s head.
Lesson 6. An instruction with no scope in it is an instruction with no limit in it.
Question 6. Could you show a card company what your agent was allowed to spend, in numbers, on a given day?
Part 7: Joan
Dolores, who has run a business for thirty years and does not like losing $62,000, hires Joan’s practice. Mel leads; Joan comes for the first day. She does not ask whether the order was reasonable. She asks what STOCKHAND was told, by whom, and when.
Mel finds that “opportunistic buying” was switched on during installation by the vendor’s engineer, on a screen Luis clicked through, and that the fifteen-percent trigger was the demo value. Nobody at Tolliver ever saw the word. The sentence “restock the usual” was the only thing anyone at Tolliver ever said to the agent, and it had no number in it.
Lesson 7. Who said so, when, and can anyone check?
Question 7. What is running in your business on a setting nobody at your business chose?
Part 8: Reconstruction
Mel rebuilds the Monday morning from five systems: STOCKHAND’s log at its vendor, Caskey’s agent log, the card network’s authorisation record, Tolliver’s stock system, and Luis’s email. The card network’s clock and the vendor’s are eleven seconds apart; by one, Caskey accepted before STOCKHAND asked, which is impossible and is simply the clocks.
The five records agree on everything except the thing the dispute is about. Each says what moved. None says what Luis meant, because nothing was built to ask him.
Lesson 8. Five systems can agree on what happened and still have no idea what was intended.
Question 8. How many systems would you open to prove what you meant by one sentence?
Part 9: The review
Tolliver’s rule is that Luis approves any order over $5,000. STOCKHAND’s orders went out as eleven store orders, the largest $5,940. Luis approved that one in the vendor’s app, on his phone, in the car park, with a tap. His approval is a timestamp. What he saw was a line saying “Caskey, fasteners, $5,940, Ridgeway”. He did not see the other ten.
He was not careless. He was shown one eleventh of a decision and asked to approve it.
Lesson 9. Oversight that leaves no trace is not oversight; oversight shown a fraction of the decision is not oversight either.
Question 9. When a person approves what your software proposes, how much of the proposal do they see?
Part 10: The cost
The arbiter finds for Caskey: the agent was the cardholder’s, the card was valid, the goods were delivered. Tolliver pays. Caskey, who did nothing wrong, takes back half the fasteners at a restocking fee, because Dolores asked and because Caskey wants the next order. The vendor sends a knowledge-base article about the opportunistic setting. Luis turns the agent off and does the spring ordering by hand, from his mother’s old spreadsheet.
Lesson 10. When nobody did anything wrong and the money is still gone, the record was the thing that was missing.
Question 10. If your agent and a supplier’s agent did a deal you never meant, who would pay?
Part 11: WHAT IF
This part did not happen. It is the same Monday, imagined with the record in place.
When Luis types “restock the usual for spring”, STOCKHAND writes down what it takes that to mean before it does anything: the categories, the quantities, the ceiling in dollars, the settings it is applying and where they came from. It writes it in a form the card network, the supplier and Luis can all read, where none of them can quietly change it. It shows Luis the whole of it, not one store’s slice: “$62,140 across eleven stores, four times last spring, because opportunistic buying is on.” Luis says no. The no is a record. STOCKHAND orders the usual.
If he had said yes, the card network would have held his yes, with its numbers, beside the charge, and there would have been nothing to dispute. Either way, the sentence and the money would have been joined by something a stranger could read.
Lesson 11. Write what you understood before you spend it, where the other side can see.
Question 11. What would your agent have to show you before you let it spend?
Part 12: Four questions
Joan asks seven buying-agent vendors the four questions she asks everyone.
Where is the decision recorded? In what form? Who outside your company can check it hasn’t changed? Can it be read now?
Six send pages about approval workflows and spend controls. One answers all four.
Lesson 12. A spend control is a promise the software makes to itself. A record is one it makes to everyone else.
Question 12. Ask your buying-software vendor Joan’s four questions. Post what you get back.
Part 13: The record
What the one vendor had was not a smarter forecast. It was a record of what the agent understood, what it was allowed, and what it did, written before the money moved, kept where neither the vendor, the buyer nor the seller could edit it, and readable by the card network the same morning. The agent could still have misread “the usual”. It could not have spent $62,000 on the misreading without showing its work first.
A protocol is not a product. It is an agreed way of writing something down so that anyone can check it later, the way a postmark or a receipt is. This one says three things. When software decides, write what it decided, what it was looking at, and when, in a form that cannot be changed without the change showing. Give a fingerprint of that record to someone outside your company. Let anyone with the fingerprint check the record, now or in ten years. Any vendor can follow it. The one vendor did.
Joan’s four questions, for any decision your software makes: Where is it recorded? In what form? Who outside your company can check it hasn’t changed? Can it be read now?
The one vendor used an open protocol called FORAY. Nothing changes quietly.
The honest claim: FORAY proves what was recorded, when, and that nobody has changed it since. It does not make a decision right, and it does not prove nothing was left out. It proves what was there.
Joan’s next case is somewhere else.
Lesson 13. What a protocol is, and why the smallest business needs it most: it has no lawyers, only the record.
Question 13. Which of the 13 lessons would your bookkeeper disagree with?
Tolliver Hardware, STOCKHAND, Caskey, Dolores, Luis, Mel and Joan are fiction. The problem is not.
Every case in RECONSTRUCTION is listed in the Library. Case 1, First Harbor Bank, is running on LinkedIn and here, one part a week on Mondays.
I build tools for this problem through my company, DUNIN7.