13Dec

Businesses and consumers avoid expensive problems when receipt ban fails to become law.

California Bill to Ban Paper receipts
California Bill to Ban Paper receipts fails to pass into law.

The August 30 failure of a misguided law in Sacramento, California shows how lawmakers don’t understand the relationship between businesses and consumers. California assembly Bill 161 would have required stores to ask shoppers if they wanted a receipt before printing paper receipts.

California Assemblyman Phil Ting (D-San Francisco) expressed his disappointment but indicated that he would try again in 2020. The original bill would have required businesses to provide customers with an electronic receipt unless they specifically requested a paper receipt. But this raised privacy concerns and led to the bill being modified to eliminate the requirement for digital receipts. The failed law also sought to ban certain chemicals that are used on paper receipts.

The proposed bill would have required California businesses to comply by 2022 and proposed fines for businesses that did not comply. The added staff to enforce this law would have cost $717,000 a year, according to an estimate by the Department of Justice.

Supporters of this proposed law cited the paper that would be saved by AB 161. But the bill ran into opposition from several business and industry groups. The American Forest and Paper Association estimated that the United States generates 180,000 tons of paper receipts each year. But this is only a small percentage of total paper waste and total paper recycling each year nationwide.

Cost Burden on Business

It is fortunate that this law failed, because of the burden it would’ve posed especially for small businesses. Violators of the receipt ban would have received warnings before receiving a $25 per day fine.

But this does not consider the cost of installing a computer system that can generate digital or email receipts. Early in the lawmaking process several California business groups including the California Chamber of Commerce, California Grocers Association and California Restaurant Association stated that the change to digital receipts should be driven by the marketplace.

The California Restaurant Association said the new law could cost restaurants roughly $35,000 to purchase a point-of-sale system that would generate electronic receipts. The use of electronic receipts would have also opened up customers to loss of their digital privacy.

Inconvenient for Customers

The Grocers Association argued that receipts are helpful for stores as a way to verify that customers leaving the store with an item had actually purchased the product. The lawmakers also overlooked how useful receipts are for customers. A paper receipt often serves as a checklist for shoppers to ensure that they have received all items that they had paid for and that they have not been overcharged for each item. The California lawmakers never considered that receipts act as proof of purchase and make it easier for the store and the customer to carry out a product return or exchange.

Threat to Customer Privacy

The consumer privacy group, Electronic Frontier Foundation, argued that the proposed law would create a permanent digital trail for purchasers at a drugstore. What could hackers do with the names and addresses of patients and their potentially sensitive list of medications or prescriptions they purchased at a drugstore? With detailed customer contact information, stores could easily sell customer names to data brokers or advertisers who could subject customers to a barrage of unwanted advertising or spam.

Considering all the problems caused by this misguided California law, both businesses and their customers are better off that AB 161 failed.