NEW YORK -- New York Attorney General Andrew M. Cuomo issued a consumer alert yesterday after his office's undercover investigation into the sale of gasoline found that approximately one-fourth of New York City area gas stations allegedly engage in deceptive practices, including wrongfully surcharging credit-card customers. Cuomo's statewide investigation discovered that New York City, along with the Long Island region, has far more stations that illegally overcharge customers for gasoline than any other region in the state. Under New York State law, retailers are not allowed to impose a surcharge [image-nocss] on customers for using a credit card.
In addition, Cuomo's investigation also identified instances where stations across the five boroughs allegedly engaged in false advertising by only listing the lower cash prices on their street-view signage in order to lure patrons to the pump. In several cases, the stations failed to disclose that the price was only for cash transactions. Once at the pump, consumers discovered that they were charged more for using a credit card—a deceptive "bait-and-switch" practice.
Cuomo warned drivers across the New York City area to be on the guard for stations that overcharge credit-card users at the pump. His office is also in the process of sending "cease-and-desist" letters to approximately 30 stations across the city that were found to be engaged in deceptive and unlawful practices, and is following up on the hundreds of consumer complaints it received since the investigation was announced last week on Long Island.
(Click here for CSP Daily News coverage of Cuomo's announcement last week about alleged deceptive practices at Long Island stations. Also, AGs in several states have been very active in investigating pump practices and complaints in recent weeks.)
Cuomo's office conducted an investigation that inspected approximately 130 stations across the city and found that approximately one-fourth of stations were engaged in deceptive practices by either charging customers more for using a credit card, or by posting only the lower cash prices on their large, street-facing signs in order to lure patrons to their station and then charging them more at the pump.
He noted that customers who use credit cards already pay a premium to the credit card company. An additional "usage fee" at the pump doubly penalizes the customer. The investigation also determined that by withholding the higher credit-card price until the consumer has already parked at the pump, the stations mislead consumers and prevent honest comparative price shopping from the street. Some stations did include the word "cash" in small letters on the large signs, but the word was too small or faint to read from the street.
Separately, New York state comptroller Thomas P. DiNapoli announced yesterday that his office will be auditing gasoline prices on the New York State Thruway to determine if stations are overcharging motorists for fuel. The gasoline price review will be added on to the scope of an ongoing DiNapoli audit of the Thruway's service plaza finances. DiNapoli also called on the Thruway Authority to post on its website the gasoline prices at every rest stop on the Thruway.
"The Thruway has already jacked up its tolls," DiNapoli said. "We want to make sure that motorists aren't being shaken down at the pump, too. There are limits to how much stations on the Thruway can charge. Our audit will look at whether or not those limits are being adhered to. Anyone who drives the Thruway knows gas prices are higher, and motorists are forced to pay those prices. There aren't a lot of options once you get on the Thruway. But just because those stations have a captive market doesn't give them license to gouge at the gas pump. Gas prices are high enough already."
He added, "The Thruway should post the prices from every rest stop on its website so drivers can make informed decisions about where to buy their gas."
DiNapoli noted that under the contract for Thruway services, prices for gasoline are limited to the lower of two cents higher than the average charged by stations in the region, or one cent lower than the highest price in the region. Regional prices are determined by weekly surveys of gasoline prices in each region.
DiNapoli said the audit will also examine the reliability of the regional surveys as well as the Thruway Authority's enforcement of the price limits.
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