Merchant Authorized Consumer Cash Substitutes

Abstract

Merchant Authorized Consumer Cash Substitutes (MACCS) have existed in one form or another for hundreds of years although without a generic name. At nineteenth century American railroad construction sites far from established towns, companies paid employees with “scrip.” Coca Cola, beginning in 1887 issued “coupons” which entitled bearers to a glass of soda. About the same time the Standard Oil Company — a customer — demanded “rebates” from railroads who shipped its oil. Descendants of these merchant-created substitutes are the MACCS of today-- phenomena including today’s “Penny-Saver Coupons,” “Groupons,” “Gift Cards,” “Disney Dollars,” “E-bates,” “Air Miles,” “Rewards Points,” and “cash-back offers.” There are countless tangible and virtual MACCS. The authors offer a functional definition in this initial approach to the subject. They explore the desirability for consumers and merchants of a unified and comprehensive treatment of this subject and recommend a new federal statute, or an Article of the Uniform Commercial Code which would address such matters as warranties, insolvency risks, deceptive and misleading practices, fungibility, frozen value, essential disclosures and privacy protection.

Keywords: Consumer Law, gift cards, coupons, ebates, rebates, scrip, merchant, payment systems

JEL Classification: K12, K2, K29, K35, K36, K40, M3, M31, M37, E42, D18, G23