Eugene Volokh (The Volokh Conspiracy)
following question from Mitch Reifel:
Just sort of a legal curiosity. The Starbucks I frequent now has a sign: We can no
longer accept bills larger than $20. They are following many gas stations in the area
that don't accept bills larger than $20 "after dark".
Is this legal? While I am generally agreed to the view that businesses should be able
to set their own practices (and customers can go elsewhere if they don't like them),
currency issued by the U.S. is another matter and I thought, legally, Starbucks has
to accept a $50 for "all debts public and private". There is also the issue of keeping
confidence in a fiat currency, which is in the best interest of the U.S. government.
Kevin Drum (CalPundit) had the following
In any case, Eugene's answer is that if you buy something first and *then* pay for
it (as in a "pump then pay" gas station) they have to accept your $50 bill. However,
if you have to pay up front, they can simply refuse to do business with you.
That's clever, but I'd like to suggest two other answers that are completely
unrelated to any knowledge of the law:
Stores have been doing this for a long time, and it's a dead certainty that
some loon somewhere has litigated this. So, since many stores continue to have
this policy, apparently that person lost.
Perhaps the gas station has to *accept* your $50 bill, but they don't have to
give you change. It's up to you if you want to do business with a merchant who
has this policy.
Any other ideas?
Around 20 years ago, I worked in a number "pump then pay" gas stations (which had
convenience stores as well). Every one of these stores/stations had a policy of not
accepting bills over $20 to reduce the risk of robbery.
If a person wanted to buy a packaged good from inside the store (e.g. a bag of chips,
a candy bar, a bottle of soda) and tried to pay for it with a $50 bill, we would just
refuse the sale. Since a person is not the owner of the goods until they pay for them,
and the goods are not damaged or consumed, there is no debt. The fact that currency
is "legal tender for all debts, public and private" is not relevant, and any business
transaction of this nature can be refused by the business owner. The key here is that
the good can be put back on the shelf, and the store and customer are in the same
condition as before the customer entered the store.
In the case of the customer who pumps gas into their car, then tries to pay for it with
a $50 bill, I'm going to have to disagree with Eugene and Kevin. Assuming that the store
has a sign, visible from the pumps, stating the policy of not accepting bills larger
than $20, the customer has a big problem.
The store does not *have* to accept the $50 bill. The store could accept it, but if the
store personnel are following proper cash handling procedures, they would not have
enough money in the register to give change. The law can't force a business to provide
something it does not have (change), nor does the law force a store to give a customer
free gas because the store doesn't want to accept $50 bills.
Paying for the gas but not receiving the full amount of change due (or any), resulting
in the customer paying $30-$40 for $5-$15 worth of gas, is usually not acceptable to
the customer (they tend to view this as being "ripped off"). This could also open the
store up to theft or fraud complaints from customers, because the store is forcing
them to pay more than the posted price for a product.
If the store does not accept the $50 bill, and the customer drives off of the premises,
this is theft by the customer. Occasionally, customers would threaten to leave without
paying if we did not accept the $50 bill, hoping to pressure us into accepting it. We
simply warned them that we would call the police, give the police the license plate
number of their car, and file a theft complaint.
Sometimes customers would call the police themselves, hoping that by doing so, the
police would take their side. The police always told them they better figure out a
way to pay for the gas or expect to be arrested for theft.
Typically, what would happen is that the customer would call a friend or family member
and have them bring money to pay for the gas, or take them somewhere to get change for
their $50 bill. If the customer had to leave to get change, their car was left on the
premises to ensure we would not file a theft complaint.
If we were willing to violate store cash control policy, we had a couple of more options
available to us:
If the store did a brisk amount of business (at least $100 / hour in sales), we would
ask the customer if they were willing to wait 10 to 30 minutes until we had enough
cash in the register to give them change. Most customers we made the offer to
accepted it; other customers made such assholes of themselves that we wanted them out
of the store as soon as possible and we did not offer this option to them.
If it was the middle of the night and business was dead, sometimes we offered the
customer the option to pay with the $50 bill, leave their name, address, and drivers
license number, then return in the morning when the store manager was present and
could provide change from the store safe.
In either case, customers had no right to demand or expect this treatment. We were
putting our jobs on the line by violating store policies.
Unofficially, rather than strictly adhering to the "No bills accepted over $20" policy,
I accepted any bill as long as I did not have to give the customer more than $20 change.
A customer could use a $50 if they were going to spend at least $30 in my store, and
they could pay with a $100 bill if they spent at least $80. It didn't make sense to me
to turn down large sales like that when there wasn't any additional risk to me or the
store (the risk is the same whether a customer pays with five $20 bills or a single $100
In the case of small items like microwavable foods which have been already opened and
heated, fountain drinks sold in cups, etc., if the customer only had a $50 or $100 bill
to pay for them, we would just take away their food or drink and write off the cost as a
loss. If the customer had consumed a significant portion of the food or drink, we would
bar them from returning to the store ("86" them).
Business policies of not taking bills larger than $20 have been around for a long time.
I don't understand how people today think they can use $50 or $100 bills anywhere,
especially when purchases are for small amounts.
For the definitive legal
a link to the U.S. Treasury's web site was posted in CalPundit's comments:
The pertinent portion of law that applies to your question is the Coinage Act of 1965,
specifically Section 102. This is now found in section 392 of Title 31 of the United
States Code. The law says that: "All coins and currencies of the United States,
regardless of when coined or issued, shall be legal-tender for all debts, public and
private, public charges, taxes, duties and dues."
This statute means that all United States money as identified above are a valid and
legal offer of payment for debts when tendered to a creditor. There is, however, no
Federal statute mandating that a private business, a person or an organization must
accept currency or coins as for payment for goods and/or services. Private businesses
are free to develop their own policies on whether or not to accept cash unless there
is a State law which says otherwise. 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.
Bottom line: Even though currency is labeled as "legal tender for all debts, public and
private", it is not mandatory that any particular denomination of currency be accepted
as payment of a good or service.
Update: Eugene Volokh has posted an
to his earlier post, which includes comments from a lawyer with the Federal Reserve Bank.
I agree with the updated post much more than his first post - it tracks more closely
with what my personal experience has been.