Apple has decided to stop accepting cash payments for iPhones purchased from retail Apple stores. Instead, they're only taking credit and debit card payments, ostensibly in an effort to keep track of everybody who buys them. But why would Apple do such a thing? After all, isn't cash legal tender for all debts public and private?Apparently not when the item being tendered is an Apple iPhone. It seems Apple is trying to cut down on unlocking and bricking, practices which, when employed together, allow the phone to be used more or less permanently with carriers other than AT&T, the firm with the exclusive (restrictive) distribution deal for the vaunted device. AT&T requires a two-year commitment just to purchase the iPhone, and unlocking/bricking lets customers out of that deal. So Apple has upped the ante on iPhone purchasers by making sure that they know each customer's identity.
Apple estimates that about 250,000 iPhone have been sold to non-AT&T customers. This means people are either unlocking them and then activating them personally on other carriers, or they're simply selling the unlocked units to folks who want to use them on another carrier. Apple is claiming 4.5 million bucks in lost revenue as a result of unlocking. Of course, we don't think the majority of iPhone purchasers were using cash to begin with, so the likelihood of this debit/credit thing having a negative impact on legitimate iPhone sales is pretty slim. Still, one wonders if there's a precedent for retailers not accepting cash for a sale. Don't think we've heard of that one before.
Reader Comments (Page 1 of 1)
10-30-2007 @ 4:18PM
Marina @ Sufficient Thrust said...
Could you use a pre-paid credit card that you purchased with cash?
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10-30-2007 @ 4:34PM
Andrew Pollack said...
Unless I am mistaken, it is against the law in the United States to ban cash sales. U.S. currency is by law "valid for all debts public and private". I seem to recall a case years ago where the IRS refused take take payment in pennies (as in buckets of them) and ended up losing in court.
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10-30-2007 @ 4:47PM
Peter said...
This is a bit of old news.
Marina - No.
Andrew - It's not illegal in the case of a private sale (which this is). It is illegal in the case of taxes (which is a public debt).
This was posted and discussed adnuseum over at Engadget.
http://www.engadget.com/2007/10/27/apple-refusing-to-accept-cash-for-iphone-limits-em-to-two-per/
http://www.engadget.com/2007/10/29/apple-not-just-refusing-cash-also-refusing-apple-gift-cards-for/
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10-30-2007 @ 5:52PM
Bert said...
Peter, then what is the "private" part of the statement for? I was also under the impression that cash could not be refused.
However, here in Canada, stores can refuse denominations (e.g. 50$ and 100$) but they must post this at the point of purchase / or distribution (e.g. at the gas pump, where you can pump-before-you-pay). Though I doubt that they could say "we refuse money of denomination of .01$ and greater".
Also, here stores can refuse large amounts of change, I think it's something like a maximum of 10 rolls or something like that.
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10-30-2007 @ 6:00PM
Bert said...
Peter, et al.
I just read the Engadget comments as well as the Bank of Canada website and it was certainly interesting. I will go to be less stupid tonight!
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10-30-2007 @ 6:03PM
Ian said...
So Apple:
1) Overcharges for the iphone
2) Won'rt sell for cash
3) Cripples iphones, which are unblocked, via automatic firmware upgrades
4) AT&T overcharges dfore the service becaue Apple shares in monthly fees.
Tell me, why does anyone support the new Evil Empire member by buying such a device?
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10-30-2007 @ 6:48PM
Big John said...
Jesus. Two Engadget posts about this, including one where the author ended up adding a post-script saying that the practice was legal.
"After all, isn't cash legal tender for all debts public and private?" Stop with this line. Just stop. I'm not in debt to Apple. If, for some reason I owed Apple money (as in overpaid wages, what have you), they have to take cash and coin. Since I'm not in debt to them and want to buy a service, it's a non-issue: Apple is a private company and can do what it wants. This is, as the US Treasury department outlines, equivalent to stores not accepting bills larger than $20, refusing to give change (FedEx does this).
http://www.treas.gov/education/faq/currency/legal-tender.shtml
"QUESTION: I thought that United States currency was legal tender for all debts. Some businesses or governmental agencies say that they will only accept checks, money orders or credit cards as payment, and others will only accept currency notes in denominations of $20 or smaller. Isn't this illegal?
ANSWER: The pertinent portion of law that applies to your question is the Coinage Act of 1965, specifically Section 31 U.S.C. 5103, entitled "Legal tender," 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."
This statute means that all United States money as identified above are a valid and legal offer of payment for debts when tendered to a creditor. 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. 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. For example, a bus line may prohibit payment of fares in pennies or dollar bills. In addition, movie theaters, convenience stores and gas stations may refuse to accept large denomination currency (usually notes above $20) as a matter of policy."
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10-30-2007 @ 6:50PM
LarryVF said...
So, if someone steals my credit card and buys 10 i-phones, will apple love me more, or love the thief that stole my credit card and bought their useless phones...I can't wait to see the outcome over all of this over their phones...Sure won't get me to the store to purchase one, or any other product they sell if they start doing this sort of stuff....
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10-30-2007 @ 11:29PM
Kamal said...
Is it just me or do other people think also think that steve jobs is going a little schizo?
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10-31-2007 @ 9:56AM
josh said...
Those numbers don't add up.. According to some estimates (recently released) apple gets upwards of $400/activated phone over the life of the 2 year contact. last time I checked 250,000 * $400 is $100,000,000.00 in lost revenue; Or atleast lost potenial over the next 2 years.
I would be intrested in seeing where 4.5m comes from.. Because they spend more than that on their superbowl add for the iphone. Are they downplaying the lose or are they amatorizing it over 2 years based on some average number of "unlocked" phones sold per day.. (time to whip out excel).
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10-31-2007 @ 7:16PM
hydrogen_wv said...
I disagree... lost revenue = very small.
The people that are buying them and unlocking them would likely not buy them if they were unable to be unlocked.
AT&T should be complaining, but Apple shouldn't. If those people hadn't bought those phones, they would have made a lot less money than they did...
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11-01-2007 @ 9:59AM
James said...
Just curious: when the iPhone first came out, it was possible (so I'm told) to enter certain faulty information in the "plan selection" portion of AT&T's website and get an iPhone on a pre-pay plan. Does anybody know if that still works?
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12-11-2007 @ 8:11PM
Xstockholder said...
I went in the Indianapolis store tonight and tried to buy a iphone as a gift for my Father with cash. They refused my sale. They said I must pay with credit card or debit card. It has to have a visa/mastercard logo because they need my information. In my opinion they are discriminating against a class of people who don't have credit cards or checking accounts, or people (like myself) who just prefers to "just pay cash"! In my opinion, our forefathers would be horrified that our marketplace as come to this. In my opinion, we should all be horrified!
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