Starbucks, gas stations, and $50 bills


Eugene Volokh (The Volokh Conspiracy) answers the 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 comments:

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:

  1. 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.

  2. 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 bill).

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 answer, 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 update 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.


Any merchant that put me through the hassle and irritation of having someone pick me up, drive me to a bank, get change, and come back to pay for gas I already pumped, rather than accept a non-counterfeit $50 bill, would earn itself the privilege of a lost customer.

And given that I'd be telling everyone I know about the experience, its safe to say it could expect to lose a few more.

Why the hell does the government even print $50 and $100 when no one wants to accept the f---ing things. All businesses should be forced to accept these bills and like it. Even if you don't have $100s in your safe someone could still rob your store.

When I'm in Europe, I never have any difficulty spending 100 Euro notes, or, in England, 100 Pound notes.

So why won't a business accept a $100 or even just a $50. A $50 is something like 30 Pounds.

It's ridiculous!

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