In 1988, President Ronald Reagan proclaimed August 21 as "National Senior Citizens Day." It's a day meant to honor and celebrate our senior citizens for the many contributions they made and continue to make to our society.
For years before the proclamation all the way today, stores, restaurants, and other businesses have honored seniors by giving them "senior discounts" on their goods and services. Are these discounts legal, or are they discriminatory? They're both.
At first blush, you may think senior discounts are illegal because they discriminate on the basis of age. After all, customers 55 and older get a cut-rate on goods and services that younger customers don't get. However, federal age discrimination laws, and similar state laws, apply only to employment. Employers can't fire or refuse to hire someone based on his age.
When it comes to senior discounts, price discrimination comes into play, not age discrimination. Price discrimination is when someone charges different customers different prices for the same goods or services. There are three basic types or "degrees" of price discrimination:
- First degree is based on each customer's willingness and ability to pay a certain price. The seller tries to get the highest price possible but makes allowances for a customer who can't or won't pay as much as someone else. For instance, two people shopping for a car at the same dealership on the same day may pay different prices for the same car based upon what they're able and willing to pay
- Second degree comes into play when goods or services are sold in bulk or large quantities. The more goods or services a buyer purchases the less he's charged. So, regardless of age, you may pay more for 100 toasters for your retail store than Wal-Mart may pay for 100,000 identical toasters
- Third degree is where senior discounts enter the picture. This is when goods or services are offered at a discount to a certain group or segment of the population to get their business. It's a marketing ploy. Seniors, in most cases, have restricted incomes so offering them a discount brings them into the store, restaurant, or movie theater
Are They Legal?
Generally, yes, so long as some general rules are followed. The discounts have to be given equally. Under federal civil rights law, companies and businesses offering services and goods to the public - such as food, lodging, gasoline and entertainment - can't discriminate against customers based upon their race, color, religion, or national origin.
So, senior discounts have to be given to all senior customers or patrons. A restaurant can't refuse to give discount to white or Catholic seniors while giving them to African-American or Jewish senior citizens.
Senior discounts play important roles. They help seniors stay on budget, serve as a "thank you" for their contributions to and support of our communities, and help businesses stay open. Everyone wins.
Questions for Your Attorney
- Do I have to give notice to my senior citizen customers if I decide to change my business' senior discount?
- Is money I save with senior discounts taxable income, like interest on my savings account?
- What can I do if a business refuses to give me a senior discount card?