Texas AG asked about service fees

Jessica M. Karmasek Oct. 18, 2011, 8:17am

AUSTIN (Legal Newsline) - One Texas lawmaker wants to know if a retail establishment, like a fast food restaurant, can legally charge an itemized "service fee" or offer a cash discount on a consumer transaction.

State Rep. Jim Jackson (R-Carrollton), who serves as the chairman of the House Judiciary and Civil Jurisprudence Committee, requested Texas Attorney General Greg Abbott's opinion on the matter last month.

Jackson, in his two-page letter to Abbott Sept. 29, said the law "seems to be clear" that offering a cash discount is acceptable in Texas.

The service fee, he noted, would be for a "small, fixed amount" and would not be percentage-based.

Included in his letter to Abbott was an example of a disclosure that would be placed on the consumer's side of the cash register.

According to the sign, a 40-cent service fee would be charged on all sales over $10 while a 50-cent cash discount would be given on cash sales over $10.

He also attached examples of how the service fee and cash discount would be handled, in the form of register receipts.

The first receipt showed the 40-cent service fee charged for a cash purchase above $10. It also included the 50-cent discount for paying with cash.

The second reflected the 40-cent fee charged for a credit card purchase over $10. However, the 50-cent discount was not awarded since the customer paid with a card.

Jackson, a Republican from Carrollton, said he asked for Abbott's opinion because there was an inquiry on behalf of an out-of-state company.

"I personally think a cash discount and/or a credit card surcharge is legal but someone obviously had some doubt, so I agreed to seek the opinion," he said in an e-mail Thursday.

According to the Attorney General's Office, the opinion committee received Jackson's request Oct. 4.

Jackson announced in July he was retiring after his current term expires.

From Legal Newsline: Reach Jessica Karmasek by email at jessica@legalnewsline.com.

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