By Jerri-Lynn Scofield, who has worked as a securities lawyer and a derivatives trader. She is currently writing a book about textile artisans.
In a world of not so long ago but that now seems so very far away, the New York City Council passed legislation banning cashless businesses. The vote, 43-3, wasn’t even close and the measure took effect in November 2020.
NYC isn’t the first place to enact such restrictions. In 1978, Massachusetts became the first to enact such a law, requiring retailers to accept cash and credit. In passing its ban in January 2020, NYC joined New Jersey, Philadelphia and San Francisco, which all approved such bans in 2019. At the time NYC acted, several other cities were mulling similar measures. according to the New York Times in New York City Stores Must Accept Cash, Council Says.
Two rationales motivated NYC’s ban. First was the large number of NYC residents – more than 10% – who lack bank accounts, and thus access to credit cards. Without a credit card, they can’t easily do business with a cashless business. According to the NYT:
The city’s Department of Consumer Affairs said last year that one in nine New York households did not have a bank account, and that one in five were “underbanked,” meaning they had a checking or savings account but relied on something other than a bank to cash a check. Bronx households, the agency said, were around twice as likely not to have a bank account.
Second is general skepticism over the security of cashless transactions, with the NYT noting they raise “the specter of hackers stealing personal data tied to digital transactions.” T The NYT reported that NYC’s unwillingness to provide carte blanche to new digital technologies extends beyond cashless retail transactions.
But New York City officials have also targeted ride-sharing and meal-delivery apps, as well as facial recognition for building entries — all in an effort to blunt the impact of advancing technology on those who are unable to use it because of financial circumstances, unwilling to for philosophical reasons or vulnerable to its darker aspects.
The penalties for violations look stringent enough to encourage compliance, especially since many of the businesses targeted are smaller ones, such as restaurants, coffee shops, and other sellers of prepared foods. I assume a $1000 fine comprises a significant bite of a day’s takings. According to the NYT:
Under the bill, businesses that refuse cash face fines of $1,000 for a first violation and $1,500 for each subsequent offense. Businesses with devices that convert cash to cards, like those found in many laundromats, are exempt under certain conditions, including a provision that there be no fee for such cards.
Now, since the city passed its cashless transaction ban in January 2020, the pandemic has unfolded. And with it an explosion in deliveries, with many opting for no-contact deliveries. The cashless transaction ban took effect in November 2020 and that’s allowed all parties time to adjust to the new universe.
I was pleased to see that last week, NYC signalled it wasn’t going to allow businesses to flout the cashless ban – despite the de facto acceptance many have accorded to cashless deliveries and other delivery modifications during the pandemic. The number of unbanked New Yorkers hasn’t changed and they still don’t have the credit cards that would be necessary for them to eschew cash in their day to day activities. NYC has received 128 complaints and issued 21 violations since the ban took effect, according to Eater in NYC Fines Upscale Ice Cream Shop Van Leeuwen for Violating Cashless Ban:
Approximately 301,700 households in NYC, or 9.4 percent of the city’s population, don’t have bank accounts, according to Department of Consumer and Worker Protection data from July 2021, and cannot easily shop at places that don’t accept cash. The majority of the city’s residents who don’t have bank accounts are people of color who live in lower-income neighborhoods without ready access to local banks.
“Cashless businesses isolate the more than 300,000 unbanked households in NYC from making transactions, as well as those who simply choose not to use plastic,” Department of Consumer and Worker Protection commissioner Peter Hatch said in a statement. “This decision is a win for all of us and it ensures that we are all included, regardless of how we choose to pay.”
Last week, NYC went after the upscale Van Leeuwen ice cream shop for repeated violations of the cashless ban. The company’s behavior seems particularly egregious as it seems their outlets aren’t even equipped to accept cash:
Van Leeuwen’s cashless days appear to be over. The fancy, minimalist ice cream purveyor has been ordered to pay over $12,000 in fines for not equipping its various NYC stores to accept cash, violating the city’s recently-enacted ban on cashless businesses.
According to a representative for NYC’s Department of Consumer and Worker Protection, the city received six consumer complaints about Van Leeuwen’s cashless stores after legislation banning the practice went into effect in November 2020. The department then issued Van Leeuwen a cease-and-desist letter, but says that didn’t stop the company from continuing to violate the law. In October, the city charged the ice cream shop with 17 violations of the cashless ban and penalized the company with $12,750 in fines.
Van Leeuwen — which started as an NYC-based food truck in 2008 and now runs over 20 shops in multiple states, and also sold the popular Kraft mac-and-cheese flavored ice cream this summer — did not immediately respond to requests for comment from Eater on the fines.
Now, my one quibble is that it seems the NYC did take a while to come down hard on Van Leeuwen despite its outright flouting of a ban that came into effect last November. The Eater account says the stores weren’t equipped to accept cash. But $12,000 in fines should motivate the company to fix that lapse. Even at an upscale purveyor, $12,000 is a lot of ice cream.
Other companies that might seek to go cashless are now on notice that NYC is serious about enforcing its cashless ban.