Louisiana Outlaws Cash For Certain Transactions

new Louisiana law prohibits “secondhand dealers” from purchasing used or junk property it intends to resell with cash. Dealers are now required to pay for their wares by check, electronic transfer or money order, and at the close of each day, report the transactions to state authorities. Somewhat surprisingly, pawn shops – the quintessential secondhand dealer – are exempted from the new law. Who is covered? Virtually everyone else who buys and resells used things more than twice a year. This would include people who sell things on eBay and families who hold frequent garage sales.

The purpose behind the new law is to make reselling stolen copper more difficult. The law is controversial, however, because it appears violate what’s known as the Legal Tender statute. Under federal law, coins and currency of the United States are legal tender for all debts. In fact, each bill in circulation is inscribed “This Note is Legal Tender for All Debts, Public and Private”.

Can a state decide that certain debts cannot be satisfied with otherwise legal tender? Under the right circumstances, probably so. This is not the first time a state has put limits on peoples’ payment options, and courts across the country have approved of similar no-cash laws. For example, a federal court in Texas upheld a water utility’s policy of refusing cash payments for water bills after several offices were robbed. The court ruled that the no-cash policy was reasonable reaction to the robberies. A New York court similarly upheld the New York City Bus System’s no-cash rules for paying bus fares.

So, is Louisiana’s new limitation reasonable? Probably so, given the growing problem with copper thefts. Generally speaking, state legislatures have wide latitude in addressing societal problems. However, you can bet one of those crisp $20 bills in your wallet that a challenge by dealers or their customers will find its way to the courts.