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News

U.S. Supreme Court Surcharging is restricted in New York, California, Colorado,
Connecticut, Florida, Kansas, Maine, Massachusetts, Oklahoma and
to rule on credit Texas. In New York, retailers found guilty of adding fees to credit card
transactions can face a $500 fine and up to a year in prison. New York
card surcharging U.S. District Judge Jed Rakoff issued a preliminary injunction against
the law in September 2013, siding with complainants by stating
T he contentious battle over credit the law violates the First Amendment and "perpetuates consumer
card surcharges has escalated to the confusion by preventing sellers from using the most effective means
U.S. Supreme Court, giving hope at their disposal to educate consumers about the true costs of credit
to retailers in 10 states that cur- card usage."
rently ban the practice of adding a fee to
credit card transactions. A court challenge Court to decide state rights
brought by five retailers in Expressions Hair
Design v. Schneiderman 15-1391 made its way The Supreme Court's stated purpose is to clarify "whether and to
through New York courts, initially winning what extent the Constitution limits state-imposed restrictions on the
in September 2013, only to be overturned on manner by which merchants can frame and convey truthful pricing
appeal two years later by New York's 2nd U.S. information."
Circuit Court of Appeals.
David Leppek President of Transaction Services LLC, said, "The
The retail petitioners allege surcharge laws Supreme Court will not decide on the legality of surcharging, but on
violate their First Amendment rights to free whether or not individual states have the right to ban the practice.
speech and due process under the U.S. Consti- Federal restrictions against credit card surcharging can be traced back
tution. These claims became the basis for the
Supreme Court review.

The New York court disagrees that surcharge
laws violate free speech, calling its measures
"price-control laws" that "regulate economic
conduct rather than speech." New York Attor-
ney General Eric Schneiderman and Manhat-
tan District Attorney Cyrus Vance noted these
price-control laws do not control pricing for
goods and services, but only "how those prices
are communicated ? that is, which of the two
prices the merchant may frame as the 'regu-
lar' price on the label, and which the merchant
may convey through a separate sign."

The New York attorneys compared surcharg-
ing credit card transactions to "bait-and-
switch" tactics that reportedly occur at gas sta-
tions. Restricting surcharge practices protects
consumers by maintaining price consistency
and preventing surprises during the checkout
process, they said.

10 dissenting states

Retailers filed similar complaints in Florida
and Texas in May and June 2016, petitioning
courts to "resolve a direct and acknowledged
circuit split over whether state no-surcharge
laws violate the First Amendment, and they
have been filed from each of the three circuits
that have thus far divided on the issue," the
plaintiffs stated.

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