United States

NY Court of Appeals finds merchants may impose credit card surcharge


The New York Court of Appeals issues opinion interpreting the “no credit card surcharge law.”

On Oct. 23, 2018, the New York Court of Appeals issued an opinion interpreting the New York General Business Law that prohibits merchants from imposing a credit card surcharge, or swipe fee, on credit card purchases. At issue was whether a merchant could post a cash price for goods and/or service with a notation that using a credit card instead of cash would result in the customer paying a larger amount and designating that difference as a percentage or dollars-and-cents amount instead of stating the total (a single-sticker regime). The court gave the following example: a haircut costs $10 and if paid with a credit card, you will pay 3 percent extra or an additional 30 cents. This practice, in effect, adds the cost of the credit card surcharge, or swipe fee, in the price of the item when customers do not pay cash.

In order to prevent consumer confusion when making credit card purchases in New York, merchants are now required to specifically state that an item will be charged a higher price if paid for with a credit card.  Meaning that now merchants will need to list the prices as “$10 for cash and $10.30 for credit cards.”

Merchants have challenged this dual-price scheme as being a violation of their First Amendment Right to commercial speech because it prohibits the merchants from describing the price difference as they wish. The New York Court of Appeals has stated that the single-sticker-price scheme is prohibited by section 518 of the New York General Business Law. The 2nd Circuit Court will now decide whether it agrees with the New York Court of Appeals.