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San Diego Businesses: Not So Fast on Cashless Retailing

In the news lately are a multitude of cities and states that are banning cashless retailing. Philadelphia just passed a city law prohibiting most retailers from refusing to take cash or charging cash-paying customers a higher price. Fine of $2,000 can be imposed on violators of the law. The law, which will take effect July 1, 2019, does exempt some businesses, including:

Parking lots
Wholesale clubs like Costco
Rental companies
Retailers using a “mobile device application” with membership requirements (like Amazon Go)

The law does not apply to sales made by phone, mail, or online and does not apply to goods and services sold exclusively to employees. See USA Today report here.

San Diego businesses should be aware of this trend, particularly if your business is moving in the direction of “going cashless.” If you do, it would be wise to consult an experienced San Diego corporate attorney to develop contingency plans if San Diego or California enacts similar legislation. Indeed, similar laws are likely to be enacted here in California as San Francisco is taking up the issue. The state might not be far behind. New Jersey has already passed a similar law which is expected to be signed soon by the New Jersey Governor. Chicago, New York City, and Washington, D.C. are also taking up the idea.

These types of laws are being driven by political, immigrant, and worker advocates concerned with increasing unemployment and the impact on impoverished members of the community and others with less than full access to credit and banking/debit accounts. For example, according to the reports, in Philadelphia region, nearly 6% of residents do not have access to credit or bank accounts and roughly 22% were considered “underbanked,” according to the Federal Deposit Insurance Corporation.

Businesses that are “going cashless” claim that the move is about improving efficiency, reducing the risk of shoplifting and robbery, and avoiding the “hassle” of handling cash. A mechanism such as a living cashier or a machine must be in place to accept cash. Both of these are avoided with cashless business. Plus, “going cashless” is a marketing technique that appeals to certain types of upscale, savvy consumers. However, this is exactly why some political and worker advocates object. For political and worker advocates, “efficiency” is code for “replacing workers with automation” and “appealing to savvy customers” is code for excluding the poor, disadvantaged, and other unwanted demographics. For these types of reasons, some advocates object to the carve-outs. For example, Mariana Chilton, director of the Center for Hunger Free Communities at Drexel University near Philadelphia disagrees with the carve-outs for parking garages. She has argued: “I think it presumes people who are low income don’t want to park their car or don’t use BJ’s [Wholesale Club].” Chilton argues that the exemptions are just the Philadelphia City Council “kowtowing to big business.” See report here. Of course, not all businesses oppose these types of laws. ATM leasing operators and businesses with ATM machine on-site have offered enthusiastic support.

Contact San Diego Corporate Law Today

If you would like more information, contact attorney Michael Leonard, Esq., of San Diego Corporate Law. Mr. Leonard can be reached at (858) 483-9200 or via email. Mr. Leonard’s law practice is focused on business, transactional, and corporate matters and he proudly provides legal services to business owners in San Diego and the surrounding communities. Like us on Facebook.