Schumer Calls for More Transparent Gas-Price Posting

Asks FTC for rule requiring full, clear disclosure of tiered pricing

Charles Schumer

WASHINGTON -- U.S. Senator Charles E. Schumer (D.-N.Y) has asked the Federal Trade Commission (FTC) to consider rules requiring greater disclosure of gasoline prices that are posted on gas station road signs so that customers know they could very well have to pay higher prices at the pump when they pull over to use a credit or debit card.

Schumer noted that "dozens upon dozens" of stations on Long Island in New York charge two separate prices for a gallon of gasoline--one for credit card customers and a discounted price for cash-paying customers. While stations are permitted to offer discounts for gasoline, Schumer said that drivers often pull over after seeing the cash-only price and wind up surprised that they will have to pay more than the advertised price at the pump when they choose to use a credit card.

He also noted that while some stations post small, "almost unreadable" references to cash, the signs make no reference to the higher price consumers will be charged if they pay by credit card.

"That's why the sign posted on the roadside should make it clear to drivers that they may end up paying more at the pump than the advertised price," he said. "A tiny, unnoticeable reference to cash doesn't tell customers they are going to pay 10 cents more a gallon by using their debit card."

Schumer pointed out that if Long Island drivers were more aware that purchasing gasoline on a credit card was a more expensive option, they may decide beforehand to use cash. He argued that many consumers wind up paying higher prices then they intended to when they pull into the station because they only have a credit card of debit card on hand. Oftentimes, consumers don't know they are going to pay a higher price than advertised at the pump until they pull into the station and get out of their car--at that point, many drivers simply pay the higher price instead of the inconvenience of getting back in the car to search for a cheaper price.

Greater disclosure would let drivers know that prices differ per payment method and would allow them an opportunity to bargain shop by choosing a station that has all around cheaper prices, he said.

Earlier this month, the Westchester County, N.Y., legislature passed a bill, sponsored by Legislator Mike Kaplowitz, (D) that requires stations to post both prices they charge on road signs, making it clear to drivers that the cost for a credit-card purchase is higher than payment with cash. Schumer's call would require the FTC to put in place rules requiring greater disclosure on road signs that paying by credit card will cost more.

His letter reads:

Dear Chairman Leibowitz,

I write today to call your attention to a pervasive practice on Long Island that I believe to be deceptive to consumers. Specifically, Long Island gas stations frequently lure customers off the road and to the pump with one advertised "cash" price, and then, without advance warning, charge those consumers up to ten cents per gallon more to pay with a credit card.

Many drivers would choose not to patronize a station if they knew that they would have to pay a higher price to use a credit card. Because the credit card price is not disclosed until the driver has pulled over, waited in line, and is at the pump, however, many drivers cannot take the time to then leave the station and find another service area that does not have tiered pricing.

Drivers shouldn't get sticker shock when they pull over expecting one price and then realize that they are going to pay 10 cents more per gallon if they pay with their debit or credit card. I believe the sign posted on the roadside should make it clear to drivers that they may end up paying more at the pump than the advertised price.

The failure to notify customers of the higher credit price happens throughout Long Island, but I'm confident the problem is not confined to New York; therefore, I ask you to consider utilizing your authority under Section 18 of the FTC Act (15 USC 57(a)) to prescribe industry-wide rules which require more clear disclosure of price differentials for gas stations. Specifically, I believe gas stations should be required to explicitly disclose in their road-side advertisements that the customer may pay more than the advertised price.