Saturday, October 30, 2010

$100 bills

I need a little help understanding something.... Background story: Friends of mine went down into the US this summer for a trip. They ordered american dollars from their bank and went down packed with 50s and 100s. And ran into trouble the entire time because SO many places completely refused to accept anything higher than a 20. Citing counterfit reasons mainly.... Okay, so they were stuck a lot. The woman had to leave her driver's license at a gas station to drive to a bank and change the cash to smaller bills. Oh but wait, this ran into trouble too because the first bank refused to do it because she was not a member. She was almost in tears by the time she found someone to give her 20s. It was a bit of a mess and caused some stress. Okay so fine, they planned to go down again a couple months later but ran into trouble up HERE because they couldn't get enough 20 dollar bills from the Canadian banks without having to wait 2 weeks (bad planning you could say, but it's not like they were going to Zimbabwe and expecting their dollars to be in the coffers at our small city banks - they were driving an hour and a half south to Montana! Anyhow they finally get going and have some 20s, some 50s and some 100s and of course run into the same troubles yet again.

So I have been thinking about this - while many stores here and in the US have posted signs on the door letting patrons know that they do not accept 100 dollar bills - is that legal?

I am all for private business making their own rules without the govt hanging over their head. I understand that some dont like to accept 100s because they have too many big bills in the drawer and it can be a security risk, or their own shop wants those bills put into the safe, blah blah blah. But if a person has already used a service - filled up with gas, ate a restaurant meal, etc - but they only have a 50 or 100 dollar bill, how is it legal for the business to refuse legal tender? It's not a credit card, a money order, offer to wash dishes to pay off your food bill (lol), it's legal Canadian or American tender printed by order of the federal government, is it not?

So I looked it up and it seems many many people have been asking the same question over the past several years. I found a link to the US treasury dept website with an FAQ section that apparently 'explains' their rules (I have not yet found a Canadian link but I will look harder when I am more awake lol).... I say it 'apparently' explains because in my opinion, it adds confusion.
According to THIS LINK, the Coinage Act of 1965, specifically Section 31 U.S.C. 5103, entitled "Legal tender," which 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."

That seems pretty straight forward, the US federal govt/treasury states that coins and currency are legal tender for ALL debts. But, it goes on in the explanation section to say "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."

So....the federal act states it is legal tender for ALL debts, but then whoever wrote the FAQ section says that private businesses can decide whether to accept currency/coins or not. I understand that the US has a different system than Canada, but the states and provinces do not print their own money, so surely the federal rules must supercede what the provinces/states come up with. Or private business, for that matter.

If you think it's okay for a business to refuse your cash and then threaten you with police action if you walk out that door without paying, then what are you going to do if someone starts printing up fake 20 dollar bills at the speed of light in order to circumvent the stores rules? They are having trouble spending their fake bills, just like we are having trouble spending our legal bills - so what if you walk into a restaurant in a few years and find out at the end that even your 20s are no longer accepted. Only coins, 5s or 10s? How fat is your wallet going to be on rent day when you have to fork out $500 in 10 dollar bills? Or when you cash your $2000 work cheque and get all 5s and 10s with a pocket-ripping bag of toonies to boot?

But all that aside- at what point do we draw the line? Private business is private business - but should they legally be allowed to refuse to accept legal federal tender? Even if your bill is $90, they do not want your $100 bill and give you 10 bucks change. That happened to my friends this summer and they had an argument with the restaurant owner because there was no sign on the door stating this. He said that it is common place to refuse those bills all over the US, and it is also his onus as the business owner to refuse their payment. They ended up putting it on their credit card, which they did not want to do but felt they had no choice without getting into trouble with police on foreign soil.

Is it ACTUALLY legal to refuse cash payment, even if fair warning is given in a little sticker adhered to the entrance? In the treasury dept pieces that I posted above, the explanation does not seem to fit the actual federal Act. It is someone's interpretation of the act, in my opinion. If someone took this issue to court, what would the outcome be? The act clearly states that US coins and currency are legal tender for ALL debts. It does not appear to have been changed to say 'but with all the counterfeiting going on, businesses can refuse to accept whatever bills have been faked a lot'.

Bear with me, I am just trying to understand this. I saw stupid comments in various 'answers' forums like 'businesses have the right to refuse service'. Yes, they do, but that is not what this is about. They already provided the service if the person filled up with gas or ate a meal. What they are refusing is legal federal tender and then threatening the customer if they do not come up with another payment - even accepting a credit card, which is not legal tender, instead. How can that be legal?
ps I used to work at a gas station here in town and we were told to try to get customers to pay with smaller bills because it messed us up if we ran out of small bills to use for change - but if they did not want to pay with a smaller bill, we had to accept it and do the best we could. It was up to us, as the service provider, to be prepared to give the customer their change. It was not up to the customer to make sure I had enough 20s in my drawer. I provided the service, the customer provided the payment. I had to make a customer wait until my coworker could make a run to the bank to buy us some more 10s and 20s one time. I had a customer leave me his driver's license (his idea) so he could run to the bank, etc. But then we installed an ATM so that helped people out. But we were never told, despite the sign on the door asking for people not to pay in large bills, to refuse payment. People talk about not wanting to work alone in a store at night with big bills in the till - but I didn't want to work alone at night with an enraged customer either, thank you very much lol. But those days are gone apparently.


  1. I did the accounting for a night club for a few weeks. In one day, I caught 4 $100 bills that were counterfeit, so we called the police. They came and took away the bills, and we never got that money back. Businesses lose millions of dollars a year because of criminals, so they try to minimize the damage. That very day, I put out a notice to stop accepting $100 bills.

    Your friends should open a $US bank account and then they can use a debit card, without worry.

  2. You can always get the bills changed at a casino.

  3. Good post - I will be travelling to the US in December and will ask for 20's and smaller. Have never run into this problem before but its a reminder that there are always pitfalls when you go to a foreign country. Cheers.

  4. I had more trouble with not having American change in large quantities in order to pay all the highway tolls between Montreal and New Jersey! Now I take baggies full of American quarters that I collect over the year before our annual vacation.

  5. All sorts of places in Canadian Malls won't take anything larger than a $50. Some won't take those.

  6. Yes there are many,many places in Canada that won't take 50 or 100 dollar bills either. I see it around town all the time but at least it's getting a bit easier to draw out other cash when there are ATMs all over the place (providing you wish to pay a higher user fee).

    It still does not explain the legality issue to me. When I worked in stores, we had training on how to spot fake bills and one place even had a special machine that backlit the bills but not all the staff could be bothered to do that, and I see now that it says 'no 100s' on the door.

    But what of the actual legal issues? How can businesses refuse payment via federally issued currency from that country? I know that businesses lose a lot of money, because consumers do as well.

    I was watching Clark Howard on cnn's HLN news (the money dude) and he said that, for example, if you were to cash a money order at a USPS branch and they ended up giving you counterfeit bills - you are out of luck. They are not responsible for it, apparently. I say, why the heck not? It's a federal workforce, federal employees, but if they hand funky money out to customers, the customer loses all of it. That's not fair either. Something needs to be done.

    When I cashed a paycheck at my bank not too long back, I wanted 20s and the teller sighed because it was a lot of money to count out (well, not THAT much cos I only make 12 bucks an hour LOL), but she seemed annoyed - well why are the banks constantly handing out 50s and 100s if you go to the teller, when they know that people are having a harder time being able to use them? They shouldn't even give out 50s or 100s anymore unless the customer asks. Likewise with giving out foreign currency - they should know by now that people going down to the States are not able to spend their 100s so they should focus on bringing in 20s instead of having to place an order 2-3 weeks in advance. They are not keeping up with the times at all.

    But again it brings me right back to 20 dollar bills. What happens if those too start getting faked more? Should we just say screw it and go back to using silver and gold coins? We can't really go 'debit only' until the technology can be free of glitches (just 3 days ago a store's machine went down and I had to leave my purchases until after work because I did not have enough time to go to the bank on my break to get cash, and no ATM in walking distance either).... so what do we do?

    As an off-shoot, a lot of businesses dont like those bills because of robberies, staff safety, etc right? Well if the crooks knew that the store could have a gun under the counter, they might think twice about robbing it. But no, as usual, we are not allowed to protect ourselves and our property so the criminal knows that the chances are the store staff is unarmed.

    related story - a man from Taber Alberta has just been charged with assault causing bodily harm for whacking a burglar on his acreage with a hacket (flatside i believe). Nice eh? the shopkeeper in toronto charged with unlawful confinement for detaining a would-be shop lifter... the BC gas station attendant threatening to call the police because the customer in his store didn't have a bill smaller than 100 and was unable to pay... federal companies handing out counterfeit cash to citizens and then refusing to exchange it because the customer cannot prove 100% they got it from that company, businesses losing money over counterfeit cash (I thought insurance used to cover this? But apparently not anymore??)... everything seems to protect the criminals instead of punishing those who perpetrate the crimes.

  7. Thanks for the suggestion for my friends to open a US bank acct. They loved camping down there and want to go again next year and I can suggest that but they almost might just collect 20s over the next year so they have it all ready to go lol.

    but seriously - if we are to rely on debit and credit, this 'cashless society', how does that bode? I got 50s out of my bank machine sometime in the last year when I was withdrawing a big chunk of money. I was surprised because I had not seen that in ages. But anyway, if places start accepting debit or credit only, there is still fraud with those as well! And there are technical difficulties (my local grocery store's machines are getting so crappy, half of them cant read my debit card anymore), the machines go down, at Christmas almost every year there are a few days in my city where the machines are so painfully slow, you have to keep trying over and over (last year I had to swipe my card 5 times in one store because it kept timing out and it was happening to each customer and taking ages to get through the tills, etc). Most places no longer accept cheques because of fraud and ISF charges, some places are now asking for photo ID when taking credit cards because of fraud, and now many are not taking certain bills because of fraud. What are we left with at the end of the day? You can use a service and then the owner of the establishment can refuse to accept any form of payment becuase of the few people out there (compared to the majority of good citizens) who commit fraud. Again, where do we draw the line?

  8. Great topic! I was under the impression (in Canada, anyway) that it is illegal to refuse legal tender. I have had many an argument over this - even recently, after filling up with gas. To my mind, that is the risk you run in business. Aw, you want an iron clad way of not getting screwed? Don't we all?
    With identity theft being what it is today, what makes the business owner think that the credit card that I give him is really mine and not counterfit? It really is a tricky issue, but as long as I keep getting issued 50's and 100's, I'll keep on insisting that they change them.



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