Tom Thumb Gas Stations Charging More for Credit Card Customers

Cash discounts not a violation of Texas’ anti-surcharge law, Texas Office of Consumer Credit Commissioner says

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    Grocer Tom Thumb stands behind charging customers who pay with credit $.10 more per gallon of gas, a practice state officials say doesn’t violate anti-surcharge laws. (Published Tuesday, Dec. 10, 2013)

    Tom Thumb implemented a new pricing policy at its gas stations, charging customers who pay using credit cards $.10 more per gallon over those who opt to pay with cash or debit.

    The new policy angered Tom Thumb loyalists RoseAnna and Bob Kennedy, who have been shopping with the retailer for more than 15 years.

    “I thought, ‘Well that’s a rip-off,’” said RoseAnna Kennedy.

    The Plano residents said they noticed the change one November day when RoseAnna was filling up at the Tom Thumb near their house.

    RoseAnna said there was one price advertised on the large sign in the front of the station, but the pump price was $.10 higher when she used her credit card.

    “I just thought it was really unfair to obviously go somewhere all the time and then they just switch something on you and you know they don’t really tell you,” she said.

    She and her husband emailed the retailer to find out what changed. In a response, Tom Thumb said:

    “We recently changed our pricing at our gas stations to ensure that customers paying with Cash or Debit Cards always get our lowest price on gas. Our price displayed in front of our stations will be our lower Cash/Debit price. The price you see posted on the gas pump will be the Credit Card price, which is 10 cents higher.”

    But under the Texas Finance Code, “a seller may not impose a surcharge on a buyer who uses a credit card.”

    Under a brand new law, sponsored by State Sen. John Carona (R-Dist 16), the Texas Office of Consumer Credit Commissioner (OCCC) can enforce that code and penalize retailers who impose a surcharge for credit card use.

    “I don’t know that anyone fully anticipated a service station operator making a change like this,” said Carona.

    Rudy Aguilar, the OCCC’s director of consumer protection, explained Tom Thumb’s policy is in line with the law.

    Because of the way the fuel prices are posted at Tom Thumb, “the gas station charge may not be a surcharge,” Aguilar said.

    Instead, under the Federal Truth in Lending regulation, it may be a discount for using cash, Aguilar told NBC 5 Investigates Consumer Unit.

    That’s what Tom Thumb told NBC 5 Investigates Consumer Unit as well.

    “We have reviewed the Texas statute and believe we are in compliance with it,” a Tom Thumb spokeswoman said in an email.

    The retailer also told the OCCC in a letter that because of how the pricing is displayed, it does not believe its “pricing offends the Texas anti-surcharge law.”

    “One man’s discount is another man’s surcharge. That’s how I’ve often looked at it. And how do you determine if something is a surcharge or a discount? From a consumer’s standpoint it doesn’t make a difference,” said Consumer Reports finance writer Anthony Giorgianni.

    The Kennedys agreed.

    “There are loopholes all over the place,” RoseAnna Kennedy said.

    Giorgianni also added that gas stations are prime targets for credit fraud. When consumers use their debit cards, if they’re victims of fraud, thieves have direct access to their bank accounts. With credit cards it may be safer because there are more protections.

    “There are federal protections when you use credit so that if there’s something wrong with the product or you’re not billed properly you can challenge that purchase,” he said.

    Plus, Giorgianni said when consumers use certain credit cards for purchases they earn points and can get cash back.

    That’s why the Kennedys choose to use their credit card, and it’s the reason why others opt for credit at the pump as well.

    At the Tom Thumb in Dallas on Lovers Lane, the cash/debit price is the price you see on the signs as you drive by. If you walk inside there is an 8-by-10 flyer explaining the policy.

    It reads: “Going forward, the price displayed at our monument signs will be our Cash/Debit price. The price you see displayed at the gas pump will be the credit card price, which is 10 cents higher.”

    NBC 5 Investigates Consumer Unit found similar set-ups at the Tom Thumb gas stations in Plano and Irving.

    At the Tom Thumb in Irving, NBC 5 bought gas with a credit card first and spent $3.19 a gallon. Then we paid in cash, and the price displayed changed to $3.09 a gallon.

    “There is no technical violation of the law. It does seem to violate the spirit of what we would have intended,” said Carona.

    Whatever the intention, the Kennedys said they’ll fight the policy with their purchasing power. They’ll grocery shop and buy gas elsewhere.

    “Neither one of us have been in Tom Thumb since that happened, and we’re going to keep it that way,” said Bob Kennedy.

    “I think it’s just a matter of sticking up for what you feel is right,” said RoseAnna Kennedy.

    Texas is only one of a handful of states with laws prohibiting surcharges for customers using credit cards.  The only entities exempt from those laws are government agencies, NBC 5 has learned.