The people had originally started working for Tian Peng because they couldn't find other jobs, and the work wasn't too heavy, with the added benefit of receiving daily rations—it was a good deal.
The employer was also very humane, even distributing food according to the number of people in each worker's family, but a few bad apples made Tian Peng realize he had been deceived, prompting him to want to change the rules.
Although it was impossible to know everyone who worked for Tian Peng, there were circles within which everyone knew each other.
The liars who had initially inflated their family sizes for more rations were usually the lazy and greedy sort, thinking the employer would be easy to fool.
They figured by reporting a few extra dependents, even if someone noticed, they would opt for a peaceful resolution and not report it to Tian Peng.
However, it was this very tolerance that led to their own interests being compromised.