> Isn’t that illegal in and of itself? Cash is legal tender for any transaction.

No, dollars are legal tender. They have to accept dollars but are not legally required to accept them in form of cash.

http://legallad.quickanddirtytips.com/legal-tender.aspx

Is it Legal for Airlines to Refuse to Accept Cash?

Fred asks whether American Airlines was acting lawfully when it recently announced that it would no longer accept cash for ?in flight? purchases, such as food and drinks. As Fred notes, ?All passengers are trapped — there is no means of egress during a flight, unlike a ground-based transport system, or other ‘brick and mortar’ retail store.? In other words, the passengers can?t defect to a rival airline in mid-flight.

That?s a great point, Fred — and thanks to my recent six-hour delay on the tarmac at LaGuardia, I can confirm that airline passengers are, indeed, trapped. But unfortunately, that doesn?t mean that the airlines have to accept our cash. The short answer is that federal legal tender laws require creditors to accept payment denominated in dollars, but generally do not require businesses to accept any particular form of payment — such as cash. Federal legal tender laws require creditors to accept payment denominated in dollars, but generally do not require businesses to accept any particular form of payment — such as cash.

Cash is King

When we use the term ?cash? in the United States, we generally mean coins minted by the US Treasury, and dollar bills, which are actually called ?Federal Reserve notes.? Some people think that cash is dirty stuff, but I confess to being rather attached to the stuff. So are a lot of people, apparently, because no-cash policies tend to raise a chorus of protests.

A couple of years ago, many consumers were frustrated when Apple announced that it would not accept cash for iPhones, and would only accept payment by credit card. In an earlier episode, we explained that Apple was probably within its rights as a private business to require payment by credit cards.

And now American Airlines? policy — which some expect other airlines to follow — is raising a similar round of protests. It just goes to show how much people like cash. I mean, I could understand making a fuss about iPhones but airplane food?

What is ?Legal Tender??

Oh well. What has people confused is the notion that cash is ?legal tender.? If you look at a dollar bill — er, Federal Reserve Note — in your wallet, you?ll see that it says ?this note is legal tender for all debts, public and private.?

?Legal tender? is what makes an official currency official. It means that a creditor must accept federal reserve notes in satisfaction of a debt. If you get to the checkout line at the local Piggly Wiggly and the cashier demands payment in rubles or pesos you have every right to say ?Sorry buddy, but I?ve got some Federal Reserve notes burning a hole in my pocket.?

You have that right under the “legal tender” statute which states: “United States coins and currency (including Federal Reserve notes and circulating notes of Federal Reserve banks and national banks) are legal tender for all debts, public charges, taxes, and dues.”

Businesses Must Accept ?Dollars,? but Not Cash

This means that US notes and coins are a valid and legal offer of payment for debts when tendered to a creditor. However, although businesses must accept dollars, that doesn?t mean they literally have to take your big wad of bills, which is bulky, difficult to make change for, and, frankly, a breeding ground for germs. A vendor can usually put reasonable conditions on the manner in which they will accept dollars, and one of those conditions can be that they?ll only accept dollars electronically, via credit card. Or, as the US Treasury explains on their website, ?Private businesses are free to develop their own policies on whether or not to accept cash unless there is a State law which says otherwise.?

So far, Legal Lad has yet to find a state law that mandates payment in cash. In fact, as we discussed in our earlier episodes, courts in a number of states have dismissed challenges to various no-cash policies. But Fred, if you can find a state that forbids no-cash policies, then you can certainly try to get the airline to accept your cash — of course, you?ll have to wait until the plane is flying over that particular state. On second thought, if you really have a hankering for rubber chicken, soggy sandwiches, and teeny-tiny bottles of chardonnay, play it safe and bring your plastic on-board.