I used to be a tax accountant, and right before I quit there was a court case abouit a bunch of servers from a SF italian restraurant disputing that formula (circa 2001/2). If I recall correctly, the waiters won and the formula was thrown out.

Yes, a surcharge is prohibited. The cash discount is also prohibited because it's another way of doing the same thing a surcharge does: punish people who pay by credit cards by making them pay more. Think about why a surcharge on the credit card transactions is not allowed. People who might use a credit card might not do so if they end up having to pay more. The credit card co's then end up losing their cut the transactions where people would have charged had the price been the same. If cash discounts were allowed, consider the following.

If I had a store, we agree that I could not do the following for a $10 item. I could not add a $2 fee as a surcharge, nor could I had a % fee as a surchrage.

If cash discounts were allowed, I could just make $12 my regular price for that same $10 item. This is what credit card users would have to pay. I would then have another price, the $10 price for the same item for people who paid with cash. The cash discount is now $2 for the item. As you can see, I'm basically charging credit card users a $2 surcharge, but calling it something else. The cards prohibit this trick.

Edit:


Okay, I did some quick research on google, and the results surprised me.At the end of my message are two linnks which have relevant info (and a quote from one of them). As logical as I might have thought the above argument was, I have to slightly change my stance.

From the quick research I did, I've gathered that I'm wrong. Cash discounts seem to be allowed, but the cash discount price has to be disclosed. In the example above, if I have a bag of cat food for sale, and I want to have a cash discount, I can do so. I have to have this info displayed. I'd have to the price listed as $12, and the cash discount price would be $10. Furthermore, I could only accept cash for the $10 price. All other means of payment: debit cards, checks, gift cards, etc, would have to pay the $12 fee. I don't think one could just offer a percentage discount for cash payments, at least from what I've read so far.

I stand by my statement that Maza violated its merchant agreement. It cannot offer me a cash discount because the prices are fixed on the menu. The owner would have to have each item listed with a regular price, and "cash discount" price. He simply could not make the offer at the end of the meal.

I don't know what the exact Idine merchant agreement is, but I wouldn't be surprised if they had stronger language about cash discounts. As they have loaned out money to the business, I wouldn't be surprised if they didn't allow any type of cash discounts at the restaurants signed up for their program.




Here are some relevant links:


http://seattlepi.nwsource.com/local/...llspent21.html

Here's a link from http://www.mercurypay.com/merchant_faq.asp which basically summarizes what I've seen in other links:

Why can't I charge a surcharge? Can the government charge a surcharge?
Surcharging credit card transactions is strictly prohibited by the Card Associations. A merchant may, however, offer discounts for cash transactions provided it is clearly disclosed to cardholders as a cash discount and the cash price is presented as a discount from the standard price available for all other means of payment. MasterCard� modified its regulations to allow the IRS to assess a 2% convenience fee. No other industries were part of that modification. Visa� is not part of the IRS program and has no exceptions to surcharge prohibition.

Sidenote:

Those links support the claims that I've seen made before that the merchant agreement prohibits the merchant from mandating miniumum and maximum amounts for credit card transactions. Of course, I've seen this violated many times. Car dealers frequently claim you can only charge X amount of the price of the car (this was discussed in a milesbuzz thread). X is usually a few thousands dollars. I often see mom & pop type stores violating the minimum purchase prohibition. (I've seen this discussed in Idine threads before).

Someday, heck, maybe later today, I'll try to find some links where one can report such violations. I've never reported a violation, but I would do so if I had a link that I could go to which would allow me to report violations in less than 5 mins.

Blah. Did some research, it looks like a merchant would really have to anger me for me to report them. Maza wouldn't qualify. One link gives the addresses one could report violations. The only good news from that link is that one supposedly can call Amex at 1-800-297-1234 (U.S.) to report violations.

I did find something interesting on the visa site here


Minimum Purchase

Visa merchants are not permitted to establish minimum transaction amounts, even on sale items. They also are not permitted to charge you a fee when you want to use your Visa card.

If you run into a problem like this with a merchant, please notify the financial institution that issued you your Visa card. These institutions have access to the appropriate Visa rules and regulations and can help you document and file your complaint. You'll find their address and/or telephone number on your Visa statement. Their telephone number may also appear on the back of the card itself.

--end quote--

I guess we can all just call our credit card companies to report violators. We all know how this goes. It's a pain, but if enough people did it...

It is possible that this formula has changed or been thrown out. I left as a auditor in 2000.

[QUOTE=the_traveler]I was an IRS tax auditor for 7 years. (Please don't hold that against me!)

Yes, it is true that all charged tips are reported on the employee's W-2. But the IRS also has a formula of "what the average waiter/waitress should receive in tips". (The amount that is "average" is different at "Bob's Diner" in Kansas than it is at a 5-star restraurant in NYC.)

I had more 2 am chicken fried steaks than I can remember at Bob's Diner. What a place!

Was it as good as the cheese fries?

I am not sure. I don't think that I ever had their food when I was sober.

It's been a week and Idine hasn't yet acknowledged the dine. When should I assume that the restaurant is trying to cheat me out of my miles and submit the receipts myself to Idine? I don't think I've ever had miles that posted automatically take this long to show up on Idine. If I'm forced to send in the receipts, I'm going to include a summary of what happened, similar to what I posted in the original post.

I would contact Idine/Rewards Network and explain what happened and when your dine was. If they request it, I would FAX the receipts to them. I find that Idine was always fast with the posting of missing dines.

10-14 days seems to be long enough. My dines usually post within 3-5 days automatically.

I sent them an e-maiil Monday and finally got a response today. As expected, they asked me to either mail or fax a copy of my credit card receipts.

What was unexpected is the advice they gave me. Basically, they told me that I should keep my membership in Idine a secret to make sure that the restaurant doesn't run my transaction in a way that prevents me from getting miles. Here's an excerpt from their e-mail response:

It is best not to inform the restaurant that you are a Mileage Plus Dining
member as a method to ensure that your credit card will be processed in
the terminal registered with our program. Since restaurant managers and
owners are aware of their restaurant's participation in our program, we
encourage this process.

Now, I just have to send my receipts in and hopefully, I'll get the miles.

I never mention that it is an idine purchase. I just give the server my CC. Even though it is a Mileage Plus Visa or a Continental Airlines MC, how will they know it is linked to idine, unless I tell them? (BTW - my UA Visa is linked to UA, but my CO MC is linked to US - so they wouldn't know otherwise.)

All my miles have posted, except a few that were my fault. (Multiple charges on the same day for the same amount - I have since learned better.)

Kinda reminds me of the Thai restaurant in Sacramento with the prominent $10 minimum notice. The costliest lunch was $6. I ordered a beer; my tab shot up to around $8 (pre-tax/tip). I had every intention of rounding the bill up to $10 even via tip.

I put the bill and cc on the table. The previously attentive staff pointedly ignored me - to the extent where I would have had to either yell or get up and go after them. The times any were nearby they made efforts to avoid eye contact. I waited and waited.

Got up, put on my jacket, etc. slowly, picked up the cc and made my way in leisurely manner out the door ... right out to the sidewalk. No response.

I dined at Maza in mid January. I used my Mileage Plus debit card and I ended up having to send it a copy of the receipt. Based on my past experience, I'm guessing the manager/owner decided to try to deny me my miles. He must have figured that I was likely to be an Idine person b/c I was using a Chase UA miles card.

I still think this is a good restaurant. You can't bet 20 miles/$ and the food is great, but I get annoyed with having to get miles manually posted.

I don't have any problem holding a merchant, even a mon&pop operation, to the terms they've agreed to. If they find iDine's terms too harsh, they don't have to participate -- most resturants don't.

In particular, offering a promotion and then acting as if the customer is a criminal for accepting the promotion is a real peeve of mine. I haven't encountered this with iDine (I don't mention I'm a member), but I have encountered it with Entertainment coupons and Priceline hotel stays.

I don't think the restaurants are trying to "cheat" anyone of the miles; but I believe I read some Rewards Network material that indicated they keep 75 or 80 percent of the transaction as repayment of the money they have previously advanced to the restaurant (leaving just enough for tax and tip supposedly). So it's about their cash flow; your miles are no concern of theirs, that's between you and idine. However, I would be wary of any place making this kind of offer because it indicates they are barely hanging on and should make you wonder what corners they are cutting.

The original post was long ago, but I think the right thing to do would be take the discount and give everyone their fair share of it. The OPs situation seems similar to if a restaurant offered you your meal for free if you could convince your group to eat there. Chances are your friends are indirectly paying your subsidy, without being given the opportunity to choose to do that or not.

Edited to add:
The above description only applies to restaurants using the traditional idine financing offered by the company. The company has been trying to move away from that model to a "marketing" model in which the restaurant does not get financing up front, and pays a much smaller percentage of the bill to idine as a commission for idine steering the customer to the restaurant. I don't know what is the breakdown, what share of participating restaurants are in each category.