New York Retailers Win Credit Card Surcharge Case

New York Retailers Win Credit Card Surcharge Case
November 4, 2013

U.S. District Judge Jed Rakoff in October ruled in favor of a group of retailers who challenged New York's credit card surcharge law. The law subjects retailers to criminal penalties if they assess surcharges to customers who pay by credit card instead of cash.

Many retailers in New York assess a surcharge to offset the costs incurred with credit card processing fees. Most store owners have to pay approximately 3 percent of a transaction to their processing company. Retailers either raise their prices, create surcharges to offset these costs, or take less of a profit. The State of New York has been trying to stop these surcharges for some time, but Judge Rakoff of Manhattan sided with the retailers.

Judge Rakoff ruled the surcharge law violated the First Amendment by preventing store owners from alerting customers about the fees associated with their purchases. He wrote the law "perpetuates consumer confusion by preventing sellers from using the most effective means at their disposal to educate consumers about the true costs of credit-card usage."

According to the law, retailers can be subject to a $500 fine and up to one year in prison for imposing credit card surcharges. Rakoff has blocked the law until the case surrounding it is completed.

Natalie Rutledge (Natalie@lowcards.com) writes for LowCards.com, where this article first appeared. Used with permission.