SAVANNAH, Ga. (CN) – The owner of 24 gas stations sued Georgia to block a law that bars him from displaying signs advertising reduced gas prices for members of his “PumpPal” club. Savannah businessman Gregory Parker says he created his direct-withdrawal debit program to reduce the high fees he must pay to accept bank-issued debit and credit cards.
Parker’s constitutional complaint in Chatham County Court claims the state is seeking “to regulate, for the first time, the manner and content of discount gasoline advertising at gas stations located in Georgia.” He sued the state, its Department of Agriculture, and the commissioner of agriculture.
Parker’s lawsuit comes as U.S. banks have come under fire, from consumers and from Congress, for the fees they charge customers for services that once were free.
Parker says his two-tiered price signs, advertising discount gas prices along with regular prices, were pre-approved by the state, which reversed its decision under pressure from competitors.
He claims the law on fuel advertising “does not authorize the commissioner to regulate the content of truthful, discount price advertising at a gas station. Instead, the statute provides only that any price advertising at a station must include the tax charged for each gallon of gas and that gas stations not engage in ‘bait and switch’ practices by charging a price higher at the pump than is advertised on signs at the station or elsewhere.”
Parker, whose 24 convenience stores in Southeast Georgia and South Carolina employ more than 300 people, claims that more than 33,000 people have enrolled in his PumpPal program, and that his gasoline sales have “increased markedly” since he began it.
He says the PumpPal club, which has no membership or transaction fees and no minimum purchase requirement, saves members about 10 cents per gallon, and that customers love it: his stores have sold more than 5 million gallons of discounted gasoline to PumpPal customers since February, saving consumers more than $550,000.
“The PumpPal club program has been an enormously successful and popular gas discounting promotion,” the complaint states. “More than 33,000 customers are currently enrolled in the program, and Parker’s gasoline sales have increased markedly since the PumpPal club program was introduced. Parker’s stores advertise the discounted PumpPal club price in a number of ways, including on large, two-tiered curb signs that display the ‘club’ gasoline price available to PumpPal club members (as well as the non-member price). The Department expressly approved Parker’s current PumpPal club discount advertising signs prior to the launch of the program.” (Parentheses in complaint).
Parker says he sought pre-approval of his signs from the state to ensure that his signs were not misleading, and that the state approved the two-tiered signs in August 2010.
But, “Notwithstanding its prior approval of the PumpPal signs, the Department now seeks to prohibit Parker’s – and any other gas station that offers discounts linked to loyalty or similar programs – from advertising at its stores the prices available under its discounted program.”
Parker says the law, which restricts advertisement of discounted prices to “ancillary signage” such as banners and stickers, and limits display of discounts to “cents per gallon discount only,” came in response to pressure from Parker’s competitors, who are upset with his success.
The law, which was slated to take effect a week ago – on Monday, Oct. 10 – would prohibit his most effective form of on-site price advertising, Parker says. And some cities, including Savannah, ban the display of certain types of ancillary signs year-round.
Parker adds: “The challenged regulation is invalid. First, it exceeds the Commissioner’s statutory authority. The statute that the Commissioner seeks to implement … does not authorize the Commissioner to regulate the content of discounted price advertising at gas stations. Instead, it merely requires that any price advertising at gas stations advertise the ‘total price’ including tax and that a station not sell gasoline at prices higher at the pump than advertised on its signage (i.e. ‘bait and switch’ selling). The Commissioner’s construction of the statute to prohibit certain truthful price discounting advertising – including the prohibition of club price advertising and any other non-cash discounting program (such as other debit card discount programs) – is well in excess of any authority delegated to the Commissioner by the Georgia Legislature.
“The challenged regulation also runs afoul of the Free Speech Clauses of the U.S. Constitution (as incorporated to the states through the 14th Amendment Due Process Clause) and the Georgia Constitution. The regulation constitutes impermissible content-based regulation of commercial speech. It prohibits truthful advertising at the curb of prices available to consumers under the PumpPal club discount program and prohibits entirely the display of the actual dollars-and-cents price of gasoline available to PumpPal club customers, while at the same time allowing advertising of more favored cash or credit prices. The First Amendment – and its Georgia counterpart – prohibits the state of Georgia from discriminating against disfavored advertising messages in this manner.” (Parentheses in complaint).
Parker says he spent $170,000 to install the state-approved two-tiered signs, and would have to spend another $80,000 to take them down and buy new signs. He would also have to bear the cost of increased advertising to make up for the lost curb signs.
If the law is enforced, Parker says, his gas stations will lose sales, because customers confused about the availability of the program would take their business elsewhere.
Parker wants the state enjoined from enforcing the law.
The Savannah Morning News reported that the state agreed last week not to enforce the new law against Parker for 30 days, pending an Oct. 19 hearing on a request for an injunction.
Parker is represented by Timothy Walmsley with Hunter, Maclean, Exley & Dunn, with co-counsel from Steptoe & Johnson in Washington, D.C.