Careful, that cash discount may not be a bargain!

It's Christmas in May at many retail stores across the country. Many Americans complain the federal government is playing its credit-tightening role like Ebenezer Scrooge, with credit card companies largely following suit. But for those willing and able to pay cash, some discounts are even better these days than during last winter's post-holiday season, say spokesmen for retailers.

"Recently, I asked one of our men's clothing salesmen how business was doing, " says Bob Shoup, a spokesman for Sears, Roebuck & co., the nation's largest retailer. "He replied: Better than last year, because prices are lower than last year.'"

But, along with legitimate sales specials, an increasing number of consumer frauds have surfaced that prey on those who think they are getting a deal by paying cash. All too often, says a spokesman for the New York City Department of Consumer Affairs (DCA), the cash-and-carry come-ons involve merchandise jacked way up in price before being "discounted."

Almost none of the discounts offered to shoppers who pay by cash instead of credit card are advertised in writing, retail industry experts say. Some stores merely raise prices beyond what they would normally charge. then slash them for cash on the spur of the moment, according to Karen Borak of The New York DCA.

But cash discount are also being legiti mately used to help counteract declining retail sales, and federal legislation is pending that could make such price cuts even more prevalent. Present federal law limits discounts for cash to 5 percent. Legislation that would eliminate the cash discount ceiling was approved April 24 by the consumer affairs subcommitte of the US House of Representatives. Some longtime congressional observers say it could be passed by the full House in the next month.

Despite the cash-and-carry lure, the US retailing industry if feeling the negative effects of the recession and credit crunch. says Joseph Ellis, a retailing expert with the brokerage firm of Goldman Sachs & co. in New York City. These factors, he calculates, have "slowed demand by 5 to 10 percentage points" compared with last year at this time.

"When business gets tougher, stores to promote more." Mr. Ellis continues. "It's your once-every-four-years-or-so discount and promotion story,"

Walk down Fifth or Madison Avenue in New York, or around the Loop in Chicago, and the word "sale" pops out of store window after window.

Jan Aaron, a spokesman for the National Retail Merchants association, which represents roughly 35,000 retail outlets, says reasons for the current rash of sales include:

* Stores are trying to take advantage of the fact that many customers are beginning to get their income tax refunds.

* Many retail outlets themselves are getting a "good buy" on wholesale goods and can afford to pass this savings along to their own customers.