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

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