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Post date: August 21 2008

Attorney General Cuomo Announces Investigation Revealing Nearly One-third Of Long Island Gas Stations Inspected Engaged In Deceptive Practices

MINEOLA, N.Y. (August 21, 2008) - Attorney General Andrew M. Cuomo today announced that an ongoing investigation by his office into the sale of gasoline has found that approximately one-third of Long Island gas stations surveyed engaged in deceptive practices, including wrongfully surcharging credit card customers. Cuomo’s statewide investigation discovered that the Long Island region has far more gas stations that illegally overcharge customers for gas than any other region in the state. Under New York State law, retailers are not allowed to impose a surcharge on customers for using a credit card.

In addition, Cuomo’s investigation also identified instances where gas stations across Long Island engaged in false advertising by only listing the lower cash prices on their street-view signage in order to lure patrons to the pump. In several cases, the stations failed to disclose that the price was only for cash transactions. Once at the pump, consumers discovered that they were charged more for using a credit card - a deceptive “bait and switch” practice.

Today, Cuomo announced that his office is in the process of sending “cease-and-desist” letters to approximately 43 gas stations that were found to be engaged in deceptive and unlawful practices.

“With summer gas prices reaching an all-time high, the last thing Long Island drivers need are gas stations hitting them with exorbitant prices for paying with a credit card,” said Attorney General Cuomo. “Our investigation revealed that Long Island is a hotbed for gas stations that engage in deceptive practices where they display one price as a way to lure customers - and then charge them more at the pump.”

Attorney General Cuomo’s office conducted an investigation that inspected approximately 120 gas stations in Nassau and Suffolk counties and found that an estimated one-third of gas stations were engaged in deceptive practices by either charging customers more for using a credit card, or by posting only the lower cash prices on their large, street-facing signs in order to lure patrons to their station and then charging them more at the pump.

Cuomo noted that customers who use credit cards already pay a premium to the credit card company. An additional “usage fee” at the pump doubly penalizes the customer. The investigation also determined that by withholding the higher credit card price until the consumer has already parked at the pump, the stations misled the consumer and prevented honest comparative price shopping from the street. Some gas stations did include the word “cash” in small letters on the large signs, but they were too small to read from the street.

This behavior comes at a time when reports show that gasoline prices this summer are more than 32 percent higher than they were last summer.

“Today’s gas prices dictate that fewer and fewer consumers have enough cash on-hand to pay the ‘cash-only’ price to fill up their tanks,” added Attorney General Cuomo. “Therefore, it is inexcusable that business owners would use the lure of lower prices to entice customers and then rip them off. These stations are breaking the law and they must immediately stop these deceptive practices, or they will be subject to further action by my office.”

The Automobile Association of America (AAA)’s Director of Government Affairs, John A. Corlett, said, “The AAA commends Attorney General Cuomo for undertaking this initiative. AAA is a proud partner in this fight. His warning to the stations engaging in this deceptive act is a welcome service to drivers who desperately need relief at the gas pump.”

Consumers who see gas stations prominently advertising the cash-only price on primary signage and then indicating at the pump that credit card customers will be charged more are urged to contact the Attorney General’s Consumer Helpline at 1-800-771-7755.

The investigation is being conducted by Mitra Hormozi, Special Counsel to the Chief of Staff, Kate Burson, Assistant Attorney General, Deputy Chief Investigator Thomas Richardson, Supervisor Investigator Georgia Nurse, Investigator Paul Matthews, Investigator William Lightbody, and Investigator Andre Job.