The New York City Council has approved, by a vote of 43-3, a bill that would make it unlawful for most businesses to refuse to accept payments in cash, with limited exceptions. The legislation aims to eliminate what supporters say is discrimination against low-income New Yorkers who lack bank accounts and credit cards. Many businesses, on the other hand, cited a variety of reasons for opposing the legislation, including a desire to appeal to card-toting consumers, speed up service, increase employee safety by reducing the chance of robbery, and eliminate the need to count cash or arrange for armored car pickups. The new law will take effect 270 days after Mayor de Blasio—who has expressed support for the bill—signs it into law.
What the NYC Bill Provides
Prohibition of Cashless Policies. The legislation amends Chapter 20 of the New York City Administrative Code (titled, "Consumer Affairs") by adding a new Subchapter 21 that prohibits most businesses from refusing to accept payment in cash. The legislation further prohibits businesses from charging a higher price for the same consumer commodity to a consumer who pays in cash when compared to a consumer who pays for such commodity through a cashless transaction.
Covered Establishments. The legislation applies to all "food stores" and "retail establishments." Food stores are defined in the legislation as "an establishment which gives or offers for sale food or beverages to the public for consumption or use on or off the premises, or on or off a pushcart, stand or vehicle." Retail establishments are defined as "an establishment wherein consumer commodities are sold, displayed or offered for sale, or where services are provided to consumers at retail." The legislation broadly defines "consumer commodity" as "any article, good, merchandise, product or commodity of any kind or class produced, distributed or offered for retail sale for consumption by individuals, or for personal, household or family purposes."
Exceptions. The legislation contains certain exceptions and carve-outs. First, covered food stores or retail establishments may refuse to accept payment in cash bills denominated over $20, or in cash for any telephone, mail or internet-based transaction, unless the payment for such transaction takes place on the premises of such food store or retail establishment.
Second, the legislation specifically states that "banks or trust companies," as defined in Section 2 of Article 1 of the New York State Banking Law, are not "retail establishments" covered under the law.
Third, the cashless prohibition does not apply to food stores and retail establishments that provide a device on premises that converts cash, without charging a fee or requiring a minimum deposit amount greater than one dollar, into a prepaid card that allows the consumer to complete a transaction at the store. Thus, some businesses with devices that convert cash to cards, like many laundromats, would be exempt if they meet certain conditions. The legislation requires that cash deposits on a prepaid card must not be subject to an expiration date or a limit on the number of transactions that may be completed. If the device malfunctions, the food store or retail establishment must accept cash payments from consumers throughout the time the machine is malfunctioning, and place a sign next to the device stating the establishment is required to accept cash during such malfunction.
The New York City Department of Consumer Affairs, the agency charged with enforcing requirements of the City's Consumer Affairs law, is empowered to "take such measures as necessary for the implementation" of the legislation, including the promulgation of rules.
Businesses that violate the cashless ban may be subject to a civil penalty of not more than $1,000 for the first violation, and a civil penalty of not more than $1,500 for each subsequent violation. The legislation does not specify whether such civil penalties may be sought only by the Department of Consumer Affairs, or whether an individual may bring civil suit for violations of the law.
New York City will join a growing list of jurisdictions to rein in so-called cashless businesses. New Jersey approved a similar ban last year, as did the cities of Philadelphia, PA, San Francisco, CA and West Hollywood, CA. Massachusetts has prohibited cashless merchants since 1978, and legislation currently is pending in Washington, D.C.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.