Cards, Cash, and iPhones

Posted by: Stephen Wildstrom on October 30, 2007

Can Apple really refuse to accept either cash or its own gift cards as payment for iPhones? In an effort to stop the sale of the hot phones to folks who want to resell them, presumably after unlocking them, Apple has banned these standard forms of payment at Apple Stores.

In the case of cash, at least, it looks like the company is on solid legal ground. It turns out that the U.S. Treasury takes an extremely literal view of the language on every Federal Reserve Note saying it is “legal tender for all debts, public and private.” If you owe someone money, the law says they must accept greenbacks in payment. But, says the Treasury Web site: “There is, however, no Federal statute mandating that a private business, a person or an organization must accept currency or coins as for payment for goods and/or services.”

Apple’s position seems a lot shakier when it comes to refusing its own gift cards, a policy first reported by Engadget and confirmed by Apple. A gift card is a sort of contract between Apple and the buyer and Apple’s own Web site says:

What products can I purchase using an Apple Gift Card?
You can purchase just about anything sold by Apple (except another Apple Gift Card, an iTunes Gift Certificate or purchases at the iTunes Music Store), including products from both Apple and third-party makers.

Even the fine-print “terms and conditions” fails to mention anything about iPhones being excluded. An Apple spokesperson explained: “This is simply a new policy at retail. I don’t have further explanation. As I understand it, the Apple web site still has a different policy.”


TrackBack URL for this entry: http://blogs.businessweek.com/mt/mt-tb.cgi/

Reader Comments

dg

October 30, 2007 08:05 PM

When I first caught glance of that, my first thought was, it was to keep stores free of a huge cash pileup. But it doesn't surprise me that they would want to limit purchases. When something is red hot like that, so many scammers dig in. Many retailers limit purchase of items like that.

John

October 31, 2007 04:25 AM

Keep your I phones, I don't like the way you are treating your customers, in fact keep you computers too now.

Glen

October 31, 2007 10:53 AM

*sigh*

If Apple keeps doing things like this it will eventually make people not want their products anymore.

I purchased an iphone and I'm not too crazy about its limited storage capacity. I bought it thinking I wouldn't ever have to carry my ipod with me as well as a telephone...I'm STILL having to carry my ipod because my iphone doesn't have the ability to carry all the music and videos I want on the road. I also still carry my old Cingular 8125 because it does things the iphone can't, so I'm carrying 3 gadgets now. What a nerd I turned out to be.

-Glen

David

October 31, 2007 11:44 AM

Why can't they just ask that a certain percentage of the purchase be paid via credit/debit. Say that a user can pay 90% of the purchase with cash or gift card as long as the other 10% is credit. That would be more fair in the case of gift cards.

jharag

October 31, 2007 12:07 PM

Well only time I used apple product when I was in college, never bought one, I was about to buy Iphone but read about apple hard locking unlocked iphones thats BAD. so I decided to wait for Meizu Minione.

SwiftSaint

October 31, 2007 12:45 PM

Well personally I think that Apple does have the right to say no to people who want to pay in cash but I don't think that it's right that they say no to gift cards. The limit is ok to because they don't want to go on backorder for the phone. They should have laid a better field for the phone before they released it knowing that people would try and unlock the phone and also knowing that people were going to want the phone in mass majorities to. But on the other hand the $200 price cut that they made 2 months after release didn't help anything out with the public either. So in my opion, they are just trying to make everyone happy and stop people from breaking the rules.

But in regards to Apple, they should keep it up. Leopards doing ok and the iPhone is doing great so there really isn't a problem is there?

SwiftSaint

Nate

October 31, 2007 12:50 PM

In Massachusets it is against the law for a store not to accept cash or gift cards. Stores must take cash or gift cards.

Steve Wildstrom

October 31, 2007 06:33 PM

@Nate--Anyone know if Apple Stores in Massachusetts are accepting cash or gift cards? The Treasury regs do say that states may impose their own legal tender requirements.

Podesta

November 2, 2007 04:25 AM

There is no law mandating merchants accept gift cards for all merchandise in Massachusetts or anywhere else I am aware of.

Whoever made that false claim is likely confused by a Massachusetts limiting the fees issuers can apply and setting a general expiration period of seven years for gift cards. Fees are the usual focus of gift cards statutes. The cards are used up only about half the time. Sometimes they are not used at all. The issuers profit by fees for purchase, debiting the card for non-use over time and when cards are not used - at the expense of purchasers. That is what consumer agencies, such as state attorneys general, care about.

Read the Mass. statute:


http://www.mass.gov/legis/laws/seslaw02/s1020510.htm

Post a comment

 

About

BusinessWeek writers Peter Burrows, Cliff Edwards, Olga Kharif, Aaron Ricadela, Douglas MacMillan, and Spencer Ante dig behind the headlines to analyze what’s really happening throughout the world of technology. One of the first mainstream media tech blogs, Tech Beat covers everything from tech bellwethers like Apple, Google, and Intel and emerging new leaders such as Facebook to new technologies, trends, and controversies.

Categories

 

BW Mall - Sponsored Links

Buy a link now!