Banning cashless stores: A little legal research may have saved Philly’s City Council a lot of trouble

A bid to ban cashless stores in the City of Brotherly Love has sparked a battle between businesses and advocates for the poor, drawing in the nation’s largest online retailer and the world’s largest ATM operator.

But could an obscure 1984 state law, meant to protect consumers paying with cash, have saved Philadelphia the trouble? Pennsylvania’s “Cash Consumer Protection Act” made it illegal for businesses “to refuse to rent or sell property or services” to consumers who don’t have credit cards.

“The state Legislature saw the wisdom in banning cashless retail 35 years ago, so there’s nothing for any municipality to regulate,” said Cary L. Flitter, a consumer law professor at Delaware Law School of Widener University and Temple University. “It is the law of the commonwealth for many years.”

Councilman William Greenlee, an at-large Democrat who sponsored the bill, said he was unaware of the state law before he introduced the legislation. Still, he doesn’t believe the statute conflicts with his bill, which explicitly mandates that retailers accept cash.

Regardless, the Philadelphia lawmakers’ attempt to regulate how consumers pay for goods and services is not very different from how politicians responded, more than three decades ago, to the growing popularity of a new form of payment – credit cards.

For Philly, the cost may be retail giant Amazon’s newest format retail store that allows customers to grab what they need and let a smartphone app take care of the payment. Amazon has warned city officials that a cashless ban could prevent it from considering Philly for its so-called Amazon Go stores.

In 1983, as hotels and car rental companies required credit cards for bookings, Pennsylvania lawmakers introduced a bill to make it “unlawful for any business to refuse to provide service or sell its wares because a buyer does not possess a credit card,” according to Inquirer archives. It became law in July 1984.

“There are a lot of people who for whatever reason do not use credit cards,” then-state lawmaker and convicted fraudster Chaka Fattah said in October 1983, when he introduced the bill. “They ought to have that option, but you hear about a lot of places where you can’t make a purchase without a credit card.”

While the Pennsylvania law bars businesses from discriminating against consumers because they don’t have credit cards, it does not require “the acceptance of any particular form of payment.” The law does allow businesses to take cash for security deposits from customers who don’t have credit cards.

There is no case law interpreting the statute, but some consumer lawyers believe merchants in Pennsylvania should be prepared to accept cash.

The Philadelphia bill, which the Council passed 12 to 4 on Thursday, would prohibit brick-and-mortar retailers “from refusing to accept cash as a form of payment” for goods and services. Violators could be fined $2,000.

“[The state law] basically says it does not mandate any type of payment," Greenlee said. “We’re mandating cash."

Like in 1983, supporters of the proposed ban say they are seeking to protect those without access to banking, credit cards, and smartphones. Those supporting Philadelphia’s proposed ban include Cardtronics, which operates roughly 1,300 ATMs in the Philadelphia region; the Restaurant Opportunity Center of Pennsylvania; and Philadelphia Jobs with Justice, a “coalition of labor unions and student, community, and faith groups.”

New Jersey lawmakers recently approved a bill that would ban cashless stores in the Garden State. Gov. Phil Murphy can sign or veto the measure. Amazon spoke to New Jersey lawmakers about its concerns with that bill, too, but has not publicly opposed the legislation.

The Pennsylvania Attorney General’s Office has not brought a case under the state law since 1998. In that case, then-Attorney General Mike Fisher settled with car rental companies Hertz, Aviz, Budget, and National Car Rental for refusing to rent to or discouraging customers who wanted to pay for rentals with cash rather than a credit card.

“The law states that a person cannot be turned away by a business if they do not possess a credit card,” Fisher said at the time. “No one can be denied goods or services because they want to pay with cash.”

Joe Grace, a spokesperson for the Attorney General’s Office, said that to the best of their knowledge the Consumer Protection Bureau has not received any complaints under the Cash Consumer Protection Act since the 1998 action.

“If consumers bring complaints to us, that’s when we can investigate and potentially take action,” he said. “If any consumer believes they’ve been discriminated against because they don’t have a credit card, they should contact our Bureau of Consumer Protection and file a complaint under this state law.”