Penny Shortages Causing Big Legal, Business Headaches in Much of U.S.

Financial Services attorney Christopher Phillips was interviewed by Courthouse News Service about how the end to penny production in the U.S. is affecting businesses, banks and retailers. The U.S. Department of the Treasury decided to cease producing pennies earlier this year, citing the cost of production, and the U.S. Mint placed its last order in May. Now, companies facing a penny shortage are left in a quagmire, as the government has yet to provide legal guidance on how to proceed when it comes to pricing. Several states have cash discrimination laws that prohibit charging cash-paying consumers a higher price than those who pay by credit card, so for now most businesses, particularly convenience stores, are rounding down to avoid class action lawsuits.

"The payments to the class are small, but the payments to the lawyers are not," Mr. Phillips said of consumer protection laws awarding damages plus attorney fees, which could incentivize litigation.

Another thorny area is Supplemental Nutritional Assistance Program (SNAP) benefits, as federal laws stipulate SNAP customers cannot be treated differently than case and credit consumers – but if stores have to round down for cash payments, they inevitably end up treating groups differently. Mr. Phillips commented, "There's no way to square that circle," to illustrate the conundrum.

Mr. Phillips also published a Holland & Knight alert on this issue.

READ: Penny Shortages Causing Big Legal, Business Headaches in Much of U.S.