Gasoline Retailers Assoc. sues gov’t over pricing restrictions at the pump
The Puerto Rico Gasoline Retailers Association has filed a civil suit against the government, asking the U.S. District Court for the District of Puerto Rico to grant an injunction against the enforcement of a law that bans them from offering a discount as an incentive to consumers who pay in cash at the pump.
In the lengthy lawsuit, the private organization that groups more than 450 individual and corporate gasoline retailers who operate more than 600 stations in Puerto Rico asks the court to ban the government from enforcing Act 150-2008, as amended by Act 152-2013, claiming it is a violation of federal law, which allows offering cash discounts to consumers who pay in cash for their gasoline purchases.
The plaintiffs include operators of stations under different familiar brands such as Shell, Gulf, Puma, Texaco, Ecomaxx, and Mobil, as well as independents.
In the claim, the group states that before Act 152-2013, they were allowed to offer dual prices to consumers — one price to those who paid in cash, and another to those who use debit or credit cards to pay. Gasoline retailers have stopped posting both prices because of the threat of fines and criminal prosecution by the Puerto Rico Department of Consumer Affairs (DACO, in Spanish), according to the lawsuit.
There are 23 plaintiffs in the suit that names Gov. Pedro Pierluisi, Justice Secretary Domingo Emanuelli and DACO Interim Secretary Hiram Torres-Montalvo as defendants.
In their argument, the gasoline retailers said that each time a consumer pays for an item or a service with a credit or debit card, the merchant selling that item must pay a transaction fee to the issuing bank, known as a “swipe fee.”
That fee ranges between 2% to 3% of the transaction total, “and it adds up to dozens of thousands of dollars per year,” according to the lawsuit.
“The ‘swipe fee,’ as any other business expense, is passed on by the merchants to consumers in the price that the merchant or retailer charges for his or her goods or service. For merchants, the ‘swipe fee’ increases the cost of doing business, and for consumers, the ‘swipe fee’ means more expensive goods or services,” according to the suit.
“For most plaintiffs, the ‘swipe fee’ is the fourth largest business expense, after electricity, payroll, and gasoline itself. For other plaintiffs, the ‘swipe fee’ expense is even greater than the payroll expense. Unsurprisingly, to minimize the ‘swipe fee’ expense, plaintiffs would like to encourage the use of cash and discourage the use of credit and debit cards,” they claim in the suit, noting that one way of making that happen is to offer consumers a discount for paying in cash.
In their claim, the plaintiffs mention the Dodd Frank Wall Street Reform and Consumer Protection Act, which through the “Durbin Amendment,” U.S. Congress recognized the right of retailers to offer a discount to consumers on payment for goods and services made in cash and prohibited companies from including contract clauses prohibiting retailers from doing so.
The gasoline retailers claim the federal statute pre-empts Act 150-2008, which allegedly eliminated the article that gave retailers the legal right to offer discounts.
This is the second time the Gasoline Retailers Association challenges the local law in court; the first claims — which they took all the way up to the Puerto Rico Supreme Court — were dismissed.
As a result, the group claims, Puerto Rico is the only U.S. jurisdiction banned from offering discounts at the pump for payments in cash, as per the local law. Given that they have exhausted all local legal venues, they are turning to the federal court for a preliminary and permanent injunction against the implementation of Act 150-2008, the plaintiffs said.