Did Connecticut gas stations have to disclose that a cash discount did not apply to debit card purchases?

Plain-English summary

Connecticut's consumer-protection commissioner asked whether gasoline retailers offering a lower cash price had to tell customers when the discount did not apply to debit-card purchases. At the time, the Department of Consumer Protection did not require that notice.

Attorney General Richard Blumenthal distinguished the pricing rule from the disclosure issue. Section 42-133ff(c) did not require a retailer to offer any cash discount or to extend one to debit cards. Debit-card transactions could generate retailer fees, so the economic reason for a cash discount did not necessarily apply to them.

The opinion nevertheless concluded that retailers should affirmatively disclose when a posted cash discount excluded debit cards. Consumers often viewed debit and cash payments as equivalent because both drew money directly from the customer's bank account. Without notice, particularly where signs excluded credit cards but said nothing about debit cards, the omission could mislead consumers.

The AG said the Department had authority to require notice and should do so. Because the Department had not previously required it, the opinion said the requirement probably needed prospective regulations.

Currency note

This opinion was issued in 2009. Subsequent statutory amendments, court decisions, or later AG opinions may have changed the analysis. Treat this page as historical context, not current legal advice. Verify current law before relying on any specific rule, deadline, or remedy mentioned here.

Who this opinion addressed in 2009

Gasoline retailers

The opinion did not require retailers to give debit-card users the same discount as cash customers. It concluded that retailers should disclose clearly when the cash price did not apply to debit purchases.

Debit-card users and other consumers

The opinion identified a risk of confusion when a retailer advertised a cash discount, expressly excluded credit cards, and did not say that debit cards were also excluded. It treated likely-to-mislead omissions as potentially deceptive.

Consumer-protection regulators

The AG concluded that the Department had authority to require affirmative notice. In light of the Department's prior practice, the opinion said a prospective regulation probably was necessary.

Common questions

Q: Did a gas station have to give debit-card customers its cash discount?
A: No. The opinion said Section 42-133ff(c) did not require a cash discount or require that a cash discount also apply to debit-card purchases.

Q: Why did the AG call for notice if the prices could differ?
A: Consumers often viewed debit cards like cash because funds came directly from a bank account. The AG concluded that silence about the debit-card exclusion could mislead them.

Q: Could the Department of Consumer Protection require the disclosure?
A: Yes. The opinion concluded that the Department had that authority and should exercise it, probably through prospective regulations because it had not required the notice before.

Q: Did the opinion say debit-card transactions cost retailers nothing?
A: No. It recognized that retailers might pay fees on debit-card transactions, leaving no savings to pass on as a discount.

Background and statutory framework

Section 42-133ff(c) allowed sellers to offer discounts for cash, debit-card, check, or similar payments instead of credit cards. The opinion explained that this permission let gasoline retailers pass to cash customers savings from avoiding credit-card transaction fees.

For the disclosure analysis, the opinion relied on Caldor, Inc. v. Heslin, which treated a retail pricing arrangement that failed to disclose its full terms as misleading and deceptive. It cited two Connecticut Superior Court decisions when explaining why a change from the Department's prior position probably had to be adopted prospectively by regulation.

Citations and references

Statute:

• Section 42-133ff(c)

Cases:

• Caldor, Inc. v. Heslin, et al., 215 Conn. 590, 597; 577 A.2d 1009 (1990)
• RW Group, Inc. et al. v. Pharmacare Mgmt. Services, Inc. et al., Docket No. X0CV054003840S, 2006 Conn. Super LEXIS 1256, at *22 (Conn. Super. Ct. April 27, 2006)
• State of Connecticut v. William A. Tomasso et al., Docket No. (X02)CV044002651S, 2005 Conn. Super. LEXIS 888, at *16 (Conn. Super. Ct. April 1, 2005)

Source

• Landing page: https://portal.ct.gov/AG/Opinions
• Opinion page: https://portal.ct.gov/ag/opinions/2009-formal-opinions/honorable-jerry-farrell-jr-commissioner-of-department-of-consumer-protection-formal-opinion-2009004

Original opinion text

Honorable Jerry Farrell, Jr., Commissioner of Department of Consumer Protection, Formal Opinion 2009-004, Attorney General State of Connecticut

Attorney General's Opinion

Attorney General, Richard Blumenthal

June 25, 2009

Honorable Jerry Farrell, Jr.

Department of Consumer Protection

165 Capitol Avenue

Hartford, CT 06106-1630

Dear Commissioner Farrell:

You have asked for our opinion whether a gasoline retailer who offers a discount for cash paying customers must affirmatively disclose to consumers when such a cash discount does not apply to debit card purchases of gasoline. You have informed us that your Department does not presently require affirmative notification to consumers when a cash discount does not apply to debit card purchases.

Section 42-133ff(c) of the General Statutes provides, in relevant part: “Nothing in this section shall prohibit any seller from offering a discount to a buyer to induce such buyer to pay by cash, debit card, check or other similar means rather than by credit card.” As a result of this statute, some gasoline retailers in Connecticut have offered a discount to consumers who elect to pay for their gasoline purchases with cash, rather than a credit card. However, you have informed this office that some gasoline retailers do not offer the same discount to customers who use debit cards as they do for cash customers, and do not affirmatively inform debit card users that the cash discount does not apply to their purchases.

Our opinion is that gasoline retailers who offer a cash price lower than a credit card price should affirmatively disclose that the cash discount does not apply to debit card purchases. While nothing in Section 42-133ff(c) requires gasoline retailers to offer a cash discount, or to make that cash discount applicable to debit card purchases, we believe that a gasoline retailer who offers a cash price lower than a credit card price should provide notification that the cash discount does not apply to debit card purchases to avoid any possibility of confusion. Authority to adopt this position is within the Department’s purview, and may require regulations, if it represents a change in official position.

For each credit card transaction, a gasoline retailer must pay the credit card company a transaction fee, which is a percentage of the sale. Section 42-133ff(c) was enacted to allow gasoline retailers to pass along to cash paying customers the savings the retailers realize by not paying fees to credit card companies. According to information your department supplied to this office, debit card transactions are not always identical to cash transactions - - like credit card transactions, fees may be charged to a retailer for each debit card transaction. There may, therefore, be no savings to retailers from debit card transactions that they may pass on to their customers.

Although retailers may be required to pay fees for debit card transactions, consumers often view cash and debit card transactions as essentially identical because, with a debit card, money is directly withdrawn from the customer’s bank account. Because the public appears to view cash and debit card transactions as being the same, without affirmative disclosure by a gasoline retailer that a cash discount does not apply to debit card purchases, debit card consumers can be misled into purchasing gasoline from a retailer who offers a cash discount but does not offer a discount to debit card transactions. This is particularly true if the retailer explicitly excludes credit cards, but not debit cards, from the cash discount. In general, an omission that is likely to mislead consumers may qualify as a deceptive act or practice. See Caldor, Inc. v. Heslin, et al., 215 Conn. 590, 597; 577 A.2d 1009 (1990), cert. denied, 498 U.S. 1088, 111 S. Ct. 966, 112 L.Ed.2d 1053 (1991). The Connecticut Supreme Court has looked upon a retail pricing scheme that does not disclose to consumers its full terms and conditions as inherently misleading and deceptive. See id. at 594, 597, and 601.

We conclude that the Department has the authority - - and should use it - - to require affirmative notice by gasoline retailers who offer cash discounts when those discounts do not apply to debit card purchases. This requirement should be imposed by regulation if necessary as soon as possible. Should the Department decide to require such affirmative notification, the requirement probably must be adopted in the form of prospective regulations because the Department has not previously required affirmative notification to consumers when cash discounts are not offered on debit card purchases. See RW Group, Inc. et al. v. Pharmacare Mgmt. Services, Inc. et al., Docket No. X0CV054003840S, 2006 Conn. Super LEXIS 1256, at 22 (Conn. Super. Ct. April 27, 2006); State of Connecticut v. William A. Tomasso et al., Docket No. (X02)CV044002651S, 2005 Conn. Super. LEXIS 888, at 16 (Conn. Super. Ct. April 1, 2005).

Please feel free to contact me if I can be of any further assistance to you with regard to this matter.

Very truly yours,

RICHARD BLUMENTHAL

ATTORNEY GENERAL