New Jersey businesses warned over surcharges

The New Jersey attorney general's office put businesses in the state on notice that if they assess surcharges on credit card payments they must disclose those charges upfront. Failure to do so could result in fines of $10,000 or more.

The New Jersey Consumer Fraud Act was signed into law in 2023 that permits credit card surcharging but puts clear parameters around how those fees are calculated and communicated to customers. For example, the surcharge cannot exceed the cost to the merchant of processing the transaction.

Sellers also must disclose the existence of surcharges before customers incur any charges for goods or services. That means at the point of entry and the point of sale. In the case of restaurants, disclosures must appear on menus, menu boards and on signs in the customer service area.

For transactions completed on a website, mobile app or electronic kiosk, the law stipulates that notices appear before the transaction is processed on the checkout page or screen. Notices involving telephone transactions must be given verbally before the transaction is processed.

In recent months, the state attorney general's office of consumer protection has received "more than a dozen complaints from Garden State residents" regarding businesses charging fees to customers paying with credit cards, the AG's office stated in a recent press release. That prompted an investigation resulting in a total of 14 warning letters being issued to New Jersey businesses calling on them to cease and desist from failing to properly disclose surcharges

'Consumers deserve to know'

"Consumers deserve to know exactly how much they are paying for a product or service," said Acting Attorney General Matthew J. Platkin. "Any card surcharges need to be communicated clearly and in advance."

In addition to spelling out the disclosure requirement, the letters warn establishments that they cannot charge prices for merchandise that differ from the prices displayed, without adequate notice to the consumer.

New Jersey's Consumer Fraud Act prohibits the sale of "any merchandise at retail unless the total selling price of such merchandise is plainly marked by stamp, tag, label or sign either affixed to the merchandise or located at the point where the merchandise is offered for sale."

Each instance of failing to properly notify a consumer of the existence of a surcharge can constitute a separate violation of the state's Consumer Fraud Act, the AG's office stated. The penalty for a first offense is $10,000; $20,000 fines can be assessed for subsequent violations.

"We are putting merchants on notice that the division is receiving complaints and that we are focused on their practices," said Cari Fai, acting director of the consumer affairs division of the state's attorney general's office. "We urge merchants to immediately ensure that they are complying with the law and not hitting consumers with surprise surcharges."

Consumer vigilance urged

The press release went on to coach consumers on how to discern if a merchant is running afoul of the Consumer Fraud Act.

For example, be sure the merchant displays the full price (excluding tax) using each method of payment at the shelf level, the attorney general's office advises consumers. The merchant should display the full price if customers pay with cash as well as the amount charged if a surcharge is applied, which can be stated as a percentage, the office stated.

"Be wary of card surcharges that exceed the actual incremental cost of the processing fee, which is typically around 1-5 percent," the office added.

Also, "look out for card surcharges characterized as 'cash discounting.' Discounting occurs only when the consumer is invited to pay less than the full posted price," the attorney general's office advised.

Notice to readers: These are archived articles. Contact information, links and other details may be out of date. We regret any inconvenience.