By Joel D. Joseph
I attempted to file a small claims case in San Diego recently by paying the filing fee in cash. The clerk stated that fees could not be paid in cash. I told her that the Constitution of the United States, and federal law, required the court to accept cash. She said she could not because the court's policy did not allow her to do so. Nonetheless, I returned with a check in order to get the case filed. But millions of Americans do not have bank accounts and thus may be deterred from filing a small claims case.
Congress passed a law in 1884 that requires stores and other establishments to accept cash payments. 31 U.S.C. 5103. The United States Supreme Court upheld this law that required that cash be accepted as payment in The Legal Tender Cases, 110 U.S. 421 (1884). The Court ruled, "The constitutional authority of Congress to provide a currency for the whole country is now firmly established... Congress has the constitutional power to make the Treasury notes of the United States a legal tender in payment of private debts, in time of peace as well as in time of war."
That law and Supreme Court ruling did not stop the San Diego Superior Court and restaurants like Sweetgreen from refusing to accept cash payments. According to Bloomberg media, more than two years after going cashless, fast-casual salad chain Sweetgreen has reversed course and is now accepting good old legal tender at all 94 of its restaurants nationwide. Coincidentally, this change of heart comes on the heels of Philadelphia's City Council's decision last month to ban cash-free stores, becoming the first U.S. city to do so. Philadelphia's Sweetgreen store is now in compliance with this law. New York City and San Francisco are among other cities that have proposed similar legislation; two states, Massachusetts and recently New Jersey, also have laws in place that require stores to accept paper currency (per the decades-old state law, Sweetgreen was never cashless in Massachusetts). California is also considering a state law to require the acceptance of cash payments for goods and services.Unbanked
They're known as the unbanked, and the most recent numbers from the U.S. GAO, Government Accountability Office, revealed that more than seven million U.S. households did not have a bank account in 2019. Black and Hispanic households are about 60% less likely than white households to have a bank account.
Households without a bank account are also more likely to use costlier, alternative financial services such as check cashing and payday loans. Further, it is the unbanked poor who need small claims services more than wealthier individuals.
Decline of Small Claims Court
California's Small Claims court system was established in 1921. The filing fee was zero dollars in that year. In California, it now costs $75 to file a small claim for $5,000 or more. For smaller claims the fees start at $30. These fees have increased dramatically over the past decade, nearly doubling. Filings have declined by 241,258 cases (43%) between 1981 and 2000. This drop constitutes the greatest drop of any type of case.
Small claims court was established to help ordinary citizens to resolve disputes quickly and inexpensively. The decline in small claims court filing demonstrates that it is no longer the place to resolve disputes quickly and inexpensively. Requiring the payment of filing fees by credit card or check makes it less available for the poor and unbanked. To bring small claims courts back to their initial purpose, filing fees should be significantly reduced and cash payments accepted. In addition, small claims court should schedule cases at intervals and not require parties to wait around for hours and hours to get their cases heard. Consumers with disputes need a court where they can get their issues resolved with reasonable cost in a timely manner.
