A California appellate court recently found the two-tiered cash/credit pricing system Thrifty Oil used to sell gasoline did not violate California Civil Code Section 1748.1 by unlawfully imposing a surcharge on credit card purchasers. The court said Thrifty acted within the law when it assessed credit card customers a surcharge of four cents per gallon for purchases made with a credit card. The plaintiff in the class action suit against Thrifty claimed she and other credit card purchasers had been overcharged and sought monetary damages for those overcharges.
However, the Second Appellate Court of Appeal ruled that Thrifty's surcharge on credit purchasers was permitted under California Civil Code Section 1748.1(a) and (e), the Song-Beverly Credit Card Act of 1971. The court said the plaintiff failed to meet her burden of proof in failing to show that Thrifty's two-tiered pricing system was not based on Thrifty's actual costs of accepting and processing credit transactions. The court ruled the amount charged was justified by the actual costs to the company for processing credit transactions The plaintiff also failed to offer evidence that Thrifty's costs of credit transaction processing were lower than the fee charged.
Importantly for retail operators, the court ruled that the plaintiff could not hypothesize ways in which Thrifty could have recovered its credit transaction costs. The plaintiff's expert suggested that Thrifty's costs per transaction could be lower based on the volume of transactions among the company's network of stations. But, the court stated that "musings" an "expert" about possible business procedures could not overcome actual evidence Thrifty provided of its transactional costs.
The court also found Thrifty's conspicuous posting of the price difference an important fact. Even the plaintiff admitted the price difference was posted "as plain as day." Therefore, the court concluded the price difference charged to credit card customers could not be deemed deceptive.
This decision provides station operators with a how-to guide in setting up two-tier pricing strategies. Key procedures include:
* Keeping accurate records of actual costs for processing credit card transactions
* Limiting the fee charged for processing those transactions to actual costs
* Posting clearly and conspicuously fees charged for credit card transactions or discounts provided for cash sales. This posting is required under Business and Professions Code Section 13000, which regulates gasoline pricing and signage.
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