Fact check: No US law requires businesses to take cash, but local laws may mandate it
The claim: It is unlawful for a business to refuse cash payments from customers; the business can be reported and reprimanded
A growing number of businesses have gone cashless amid the COVID-19 pandemic, bringing forth criticism and false claims online regarding the legality of digital transactions.
In response to the pandemic, the Centers for Disease Control and Prevention released guidance encouraging retailers to use touchless payment options, but not everyone is happy about the recent rise of electronic payments. Some social media users claim it is illegal to refuse cash payments.
A social media post claims that if cash is turned down by a store, then the debt is recognized as paid.
"Wal-Mart just told me they are not accepting cash. Asked for manager who told me same thing. Made her get her boss and a cop," reads another Facebook post from Aug. 8. "Showed them all a letter from a lawyer which says - not accepting ‘legal tender’ in the United States - the debt is considered paid. No legal recourse."
"IF THEY REFUSE UR CASH THAN (sic) THE DEBT IS CLEARED AND TAKE UR ITEMS AND LEAVE STORES REFUSING U.S. LEGAL TENDER CAN NOT PERSICUIT (sic) A PERSON IF THEY REFUSED TO TAKE CASH!" a user posted to Facebook on July 21. " U.S. TREASURY LAW STATES IT IS UNLAWFUL TO REFUSE LEGAL TENDER ANY BUSINESS CAN ALSO BE REPORTED FOR REFUSING CASH AND REPRIMANDED!"
USA TODAY reached out to the users for comment.
There is no federal law prohibiting businesses from going cashless, however, some states have passed laws requiring businesses to accept cash.
Fact check:Payroll taxes cut by executive action must be paid back
No federal statute
The Federal Reserve indicates on its website that there is no federal statute mandating that a private business, person or organization must accept cash or coins as payment
"United States coins and currency (including Federal Reserve notes and circulating notes of Federal Reserve Banks and national banks) are legal tender for all debts, public charges, taxes, and dues," the Board of Governors of the Federal Reserve System says, citing 31 U.S.C. § 5103 which defines "legal tender."
Fact check: Walmart is not banning cash from its stores, despite national coin shortage
The site further states that private businesses "are free to develop their own policies on whether to accept cash unless there is a state law that says otherwise."
The website of the Department of Treasury also explains that while all United States money identified as "Legal tender" is a valid, legal offer of payment for debts, there is no federal statute mandating that private businesses must accept cash or coins as a payment.
"For example, a bus line may prohibit payment of fares in pennies or dollar bills. In addition, movie theaters, convenience stores and gas stations may refuse to accept large denomination currency (usually notes above $20) as a matter of policy," the Treasury's site says.
Some states, cities require businesses accept cash
States such as New Jersey, Massachusetts and Rhode Island have laws in place that prohibit businesses from banning cash. San Francisco and Philadelphia have also passed similar laws.
New York City will also join other cities in requiring businesses to accept cash starting Nov. 19. Businesses that fail to comply could face fines of up to $1,000 for a first violation and $1,500 for any violation after that.
However, some of the laws have exceptions. In New Jersey, parking facilities are exempted as well as car rental businesses, if they accept cashier's checks and certified checks.
"No retail establishment offering goods and services for sale shall discriminate against a cash buyer by requiring the use of credit by a buyer in order to purchase such goods and services. All such retail establishments must accept legal tender when offered as payment by the buyer," reads the Massachusetts Legislature website.
Massachusetts Attorney General Maura Healey has taken to Twitter to remind businesses that they must accept cash even during the pandemic.
"To the businesses that are refusing the accept cash during COVID-19 — I understand that essential businesses need to take extra precautions right now. But not everyone has a credit card, and consumers should not face economic barriers to accessing necessary goods and services," Healey tweeted.
Lauren Cox, a spokeswoman for Philadelphia Mayor Jim Kenney, told USA TODAY of the city's law banning cashless businesses that, "In a city with a 26% poverty rate, it is critical we do what we can to support equal opportunity for all residents."
Fact check:A cashless society isn't imminent and wouldn't mean total end of cash
Our rating: Partly false
There is no federal law requiring businesses to take cash, according to the U.S. Treasury and the Federal Reserve. However, some states and cities do require that businesses accept cash. Therefore, we rate this claim PARTLY FALSE, based on our research.
Our fact-check sources:
- Federal Reserve, Frequently Asked Questions
- U.S. Department of the Treasury, Legal Tender Status
- The Philadelphia Inquirer, March 18, 2019, New Jersey ban will force shops to accept cash; municipal parking lots, car rentals exempted
- City and County of San Francisco Board of Supervisors, May 24, 2019, Acceptance of Cash by Brick-and-Mortar Businesses
- New York Times, Jan. 24, New York City Stores Must Accept Cash, Council Says
- Massachusetts Section 10A: Discrimination against cash buyers
- Massachusetts Attorney General Maura Healey, April 1, tweet
- USA TODAY, Dec. 27, 2019, Should you ditch your cash? A growing number of cities say no way
- Cornell Law School, Legal Information Institute, 31 U.S. Code § 5103 Legal tender
- Bloomberg Law, July 1, 2019, Rhode Island Retailers Must Take Cash Under New Law
- New York Times, Sept. 11, Who Gets Hurt When the World Stops Using Cash
- Politico, March 18, 2019, Murphy signs bill banning most cashless stores in New Jersey
Thank you for supporting our journalism. You can subscribe to our print edition, ad-free app or electronic newspaper replica here.
Our fact check work is supported in part by a grant from Facebook.