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Government of the Virgin Islands of the United States of America Department of Licensing and Consumer Affairs www.dlca.vi.gov H. Nathalie Hodge Commissioner Testimony Before the 36th Legislature of the Virgin Islands Hon. Hubert L. Frederick, Chair Committee on Economic Development and Agriculture April 16, 2025 “Serving Businesses & Assisting, Educating and Protecting Consumers” Golden Rock Shopping Center 3000 Estate Golden Rock, Suite 9 St. Croix, VI 00820-4311 Telephone: 340.713.3522 Administrative Complex “The Battery” St. John, VI 00830 Telephone: 340.727.3303 Property & Procurement Building 8201 Subbase, Suite 1 St. Thomas, VI 00802-5826 Telephone: 340.714.3522 Testimony on Bill 36-0019 April 16, 2025 2 Good morning, Honorable Senator Hubert L. Frederick, Chair of the Committee 1 on Economic Development and Agriculture, esteemed members of the 36th Legislature 2 of the Virgin Islands, other Committee and non-Committee members present, and the 3 listening and viewing audience. 4 My name is Horace Graham, Assistant Commissioner of the Department of 5 Licensing and Consumer Affairs (DLCA). I am here today representing H. Nathalie 6 Hodge, Commissioner of DLCA. I am joined by General Counsel Geraldine Vaval and 7 we are honored to appear before you today to offer testimony on Bill No. 36-0019, an 8 act proposing to amend Title 12A, Chapter 2, Section 101 of the Virgin Islands Code. 9 This bill seeks to prohibit the imposition of surcharges for the use of credit or debit cards 10 and to authorize merchants to offer discounts to consumers who choose to pay with cash, 11 check, or other similar non-credit methods. 12 The DLCA is the primary enforcement agency for business regulations and 13 consumer protection in the Territory. As such, we are deeply committed to ensuring 14 transparency, fairness, and compliance in commercial transactions, and we support the 15 overall intent and direction of Bill No. 36-0019. The bill’s prohibition on credit and debit 16 card surcharges is consistent with the Department’s ongoing efforts to safeguard 17 consumers from unfair or deceptive payment practices. Similarly, the bill’s express 18 allowance of cash discounts provides much-needed clarity in an area that has, until now, 19 remained somewhat ambiguous in our statutory framework. 20 Currently, 12A V.I.C. § 452(a)(1) requires that all businesses and governmental 21 agencies offer at least two payment methods - one of which must be cash, and the other 22 Testimony on Bill 36-0019 April 16, 2025 3 a credit or debit card. More importantly, subsection (a)(2) of the same section prohibits 23 any business from inducing or coercing a customer to use a specific payment method. 24 While this provision reflects a clear legislative intent to protect the consumer’s right to 25 choose, it does not provide guidance on whether a business’s offer of a discount for cash 26 payments constitutes a lawful incentive or a prohibited form of pressure. 27 It is also important to note that the allowance of cash discounts is not unique to 28 the Virgin Islands or this proposed legislation. At the federal level, the Durbin 29 Amendment to the Dodd-Frank Wall Street Reform and Consumer Protection Act of 30 2010 expressly permits merchants to offer discounts to customers who choose to pay 31 using methods other than credit cards, including cash, check, or debit card. This federal 32 law was enacted to provide businesses with flexibility in managing transaction costs and 33 to encourage transparent pricing. Critically, the Durbin Amendment requires that such 34 discounts be clearly disclosed and uniformly offered to all customers, a standard that 35 aligns with the language and purpose of Bill No. 36-0019. By aligning the Territory’s 36 law with this federal provision, this bill reinforces well-established national standards 37 and reduces the risk of legal inconsistency or confusion among merchants and 38 consumers. 39 Bill No. 36-0019 directly addresses the current ambiguity by stating that 40 merchants may offer discounts to encourage payment by cash or other non-credit 41 methods, provided those discounts are clearly disclosed and offered to all potential 42 customers. This clarification is significant. It distinguishes between coercive practices— 43 such as hidden fees or the denial of card-based payment—and lawful pricing incentives 44 Testimony on Bill 36-0019 April 16, 2025 4 that provide consumers with transparent choices. In this respect, the bill strikes a 45 reasonable balance between protecting consumer rights and affording businesses the 46 flexibility to manage their operational costs. 47 While the Department supports the clarity this bill brings to the legality of cash 48 discounts, we acknowledge concerns regarding potential abuse of this provision. The 49 fear that merchants may adopt "dual pricing" systems—advertising a discounted cash 50 price while charging a higher price for credit or debit card use—raises a legitimate 51 enforcement challenge. Such practices, if not clearly regulated, may create a de facto 52 surcharge that undermines both the consumer protection intent of 12A V.I.C. § 452 and 53 the revenue transparency goals of Act No. 8205. 54 To reconcile these concerns, DLCA recommends the consideration of 55 amendments to Bill No. 36-0019 or to § 452 that: 56 • Require that any advertised price must reflect the highest price charged—typically 57 the card price—with the cash discount shown as a deduction, not the other way 58 around. 59 • Reinforce clear signage and receipt transparency, consistent with 12A V.I.C. § 454, 60 to prevent deceptive practices. 61 • Reinforce DLCA’s authority to investigate any pricing scheme that has the effect of 62 inducing or coercing payment by a specific method, even under the guise of a 63 discount. 64 It’s important to note that these strategies should not discourage the lawful use 65 of cash or penalize consumers for using it. Instead, they should aim to ensure that when 66 Testimony on Bill 36-0019 April 16, 2025 5 cash is used, it is properly recorded and reported. By addressing these issues, we can 67 preserve the consumer’s right to transparency and choice while safeguarding against 68 practices that would evade the original intent of Act No. 8205. 69 DLCA is currently engaged in investigations to ensure that businesses are 70 adhering to the existing requirements of § 452. These investigations often involve 71 reviewing whether surcharges are being unlawfully imposed and whether certain pricing 72 practices conflict with the prohibition on inducement. If Bill No. 36-0019 is enacted, our 73 enforcement efforts will shift toward ensuring that cash discounts are properly disclosed, 74 applied uniformly, and do not serve as a proxy for concealed surcharges. To achieve this, 75 DLCA will need to update its investigative protocols, provide additional training to staff, 76 and issue formal guidance to both the business community and the general public. 77 While the Department supports the bill’s substance, we respectfully request the 78 Committee’s consideration on the matter of statutory placement. Bill No. 36-0019 79 amends Section 101 of Chapter 2, Subchapter I of Title 12A, which falls under the 80 general consumer protection provisions. However, there are compelling reasons to 81 consider incorporating the amendments directly into 12A V.I.C. § 452. This section 82 already governs the acceptance of payment methods, the requirement to offer consumers 83 a choice, and the prohibition against inducing or coercing that choice. Incorporating the 84 surcharge and cash discount provisions into § 452 would place all payment-related 85 obligations and allowances within a single, cohesive statutory framework. This would 86 simplify statutory interpretation, enforcement, and compliance for DLCA staff, business 87 owners, and consumers alike. It would also reduce the risk of conflicting interpretations 88 Testimony on Bill 36-0019 April 16, 2025 6 or legal confusion that might arise from having related provisions split across two 89 separate chapters of the Code. 90 Additionally, we recommend incorporating statutory definitions of “surcharge” 91 and “discount” into either § 451 or § 452 to support consistent application and public 92 understanding. 93 In conclusion, the Department of Licensing and Consumer Affairs supports the 94 objectives of Bill No. 36-0019. We welcome the opportunity to work collaboratively 95 with the Committee on refining the bill’s language and placement to ensure that it is as 96 effective and enforceable as possible. 97 Thank you once again for the opportunity to provide testimony. I am available to 98 respond to any questions the Committee may have. 99