Are business owners who refuse to accept cash -- "legal tender for all debts public and private," as it says on U.S. currency -- violating federal law? No, there is no such law, but states can, and have, made their own legislation requiring businsses to accept cash. And, can a customer who has offered a cash payment that was refused consider that their debt paid? Short answer: Probably not.
The claim originated with a notice to businesses from Mississippi state Sen. Chad McMahan, which was coupled with a Walmart experience from a writer named Michael Weise. That two-part post was copied and pasted with an additional caption in a post (archived here) on August 8, 2020. It opened:
I just ran into this post. I have never heard of this before ... thoughts ? Opinions ? I think I'm making phone calls on Monday
This is what the post looked like on Facebook at the time of writing:
I just ran into this post. I have never heard of this before ... thoughts ? Opinions ? I think I'm making phone calls on...Posted by Primo N Denise Mendez on Saturday, August 8, 2020
(Source: Facebook screenshot taken on Thu Oct 8 20:11:56 2020 UTC)
The lengthy double post continued:
I'm going to Dutch bro's today
from Michael Weise .....
"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.
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.
Cop told Walmart management give him his items, or TAKE his cash!
Wal-Mart took the CASH!
I WILL NOT PLAY THIS GAME.
Do not fall for it - speak up!"
from Sen. Chad NcMahan.....
"Notice to businesses not accepting cash, Legal Tender, in Mississippi.
I've had several people reach out to me about an issue taking place in our state.
It is my understanding several companies in Mississippi are refusing to take cash as payment.
Take a look at the photos attached. This is a Federal Reserve Note, a $20 bill. This paper money, this note, is Legal Tender for all debts, public and private.
Business owners, if you refused to take cash, the debt is paid in full. If you are a business owner and you refuse to take cash, you are breaking the law.
Here is an example, if I stop by your store and I purchase $44 worth of fuel, and I try to pay you with a $100 bill and you refuse payment of cash, the debt is paid in full. There is nothing you can do to prosecute me because you have refused payment of Legal Tender, unless the business suspects counterfeit bills.
I'm asking residents of Mississippi to make me aware of companies who will not receive or take your cash. They will be receiving a call from my office, the Department of Revenue, and the Attorney General's office.
- Mississippi Senator Chad McMahan
office #601 359 2886.
THIS LAW HOLDS TRUE IN EVERY STATE !!!!
The Federal Reserve addressed this question on their website:
Is it legal for a business in the United States to refuse cash as a form of payment?
There is no federal statute mandating that a private business, a person, or an organization must accept currency or coins as payment for goods or services. Private businesses are free to develop their own policies on whether to accept cash unless there is a state law that says otherwise.
Section 31 U.S.C. 5103, entitled "Legal tender," states: "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." This statute means that all U.S. money as identified above is a valid and legal offer of payment for debts when tendered to a creditor.
When Mississippi state Sen. McMahan made his post on July 8 on Facebook (here)(archived here) there was some confusion. Mississippi is not one of the states that has legislation restricting businesses from going cashless. That might not be the case for much longer as McMahan has begun to draft legislation so that any business in Mississippi must accept legal tender -- cash -- as payment. This development was covered by FOX13 on July 9, 2020 in an article,"Senator working on legislation that would require all Mississippi businesses to take cash" In a follow up comment on his post, the state senator outlines 3 exceptions he is considering:
I am currently drafting legislation that would require all Mississippi companies to have a method to accept cash or legal tender. There will be 3 exceptions.
A). The business may reject legal tender if they believe the federal note is counterfeit.
B). Businesses that have contractual agreements stating electronic payment or bank draft. For example, if a landlord requires electronic payment or draft and the consumer agrees to the condition in advance of the transaction, the contractual agreement is binding.
C). An exception will be given to businesses that only have a Web or Internet based business model.
Which states have laws that prohibit cashless policies in private businesses?
- The Massachusetts law goes back to 1978. It says (here) in Section 10A. "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."
- New Jersey's act proposed in 2017, didn't pass until March 18, 2019. ABC7.com wrote, "New Jersey Gov. Phil Murphy signs bill banning cashless stores"
- Rhode Island Passed an act which was introduced in January and passed on July 1, 2020 which requires retail establishments to accept cash in payment for goods and services excluding online purchases. BloombergLaw.com wrote, "Rhode Island Retailers Must Take Cash Under New Law"
- Several large cities have legislation restricting cashless businesses: Philadelphia, San Francisco and now New York City is the most recent, on January 23, 2020, to pass legislation. ABCNEWS wrote, "Cashless stores and restaurants banned in New York City"