Last year, New Jersey enacted a law prohibiting sellers from imposing certain surcharges for credit card transactions and establishing notice requirements regarding credit card surcharges for transactions in New Jersey. According to Governor Murphy, this law was enacted partly because “all residents and visitors doing business in New Jersey deserve the utmost transparency with respect to their transactions, especially given the affordability challenges experienced by our low- and moderate-income families.” In enacting this new law, New Jersey joins several other states, including Minnesota, Massachusetts, New York, Colorado, Mississippi, Maine, Florida, and Kansas, in banning or otherwise limiting the imposition of a surcharge on customers/cardholders who elect to use a credit card in a transaction. The law went into effect immediately.
It is important to understand that the law does not outright ban sellers of goods and services from passing the costs of accepting payment via credit card onto the customer. Instead, the law mandates that sellers of goods (other than the sale of motor fuel) or services cannot charge a customer paying with a credit card a surcharge that is higher than the amount the credit card company is charging the seller for the transaction. For example, if the credit card company charges the seller a 3% surcharge for the transaction, the seller is then not allowed to charge the customer more than 3% for the same transaction when passing on the cost.
To comply with the law, sellers must follow certain notice requirements regarding additional fees. A seller that wishes to pass the costs along to a customer must provide notice to the customer of the added cost “prior to the customer incurring any charge for goods or services.” Notice is properly provided to the customer when a seller, other than a restaurant, posts a “clear and conspicuous” notice at the facility’s entrances and at the point of sale before the customer incurs any charge. For restaurants, the act requires “clear and conspicuous” notice to be posted within the “customer service area” and on the menus.
The General Assembly knows that not all credit card transactions occur in person and considered these types of automated transactions. Transactions occurring through a website, mobile app, or electronic kiosk require the seller to provide “clear and conspicuous” notice to the customer prior to the processing of the transaction. Credit card purchases made over the phone require the seller to verbally notify the customer prior to processing the transaction.
While “clear and conspicuous” is not defined within the statute, sellers should focus on making all notices stand out and be easily seen by all customers so they are properly informed of the surcharges pursuant to the law. To ensure compliance, sellers that are not restaurants must post signs at all entrances to the establishment that are easily seen and tell the customer that there will be an additional charge for using a credit card, along with information on what the charge will be. There must also be a sign or other notice that will make the customer aware of the additional charge at the point of sale. For example, a clear, noticeable sign could be posted on the cash register or next to where the customer would swipe, insert or touch their credit card. Similarly, restaurants should post signs reflecting the same as above where the host greets the customers or at the takeout counter. Clear, easily read text should also appear on all menus reflecting the same message. For online, mobile apps or kiosk sellers, the notice should be written in clear, noticeable text on the screen prior to the customer confirming their purchase.
Sellers are also required to make their accounts, books, papers, documents and other records available to the Director of the Division of Consumer Affairs in the Department of Law and Public Safety for inspection to ensure the seller is complying with the law. Sellers should cooperate with these governing bodies should they make such a request.
Lastly, penalties and remedies for violating the law are the same as those found under the New Jersey Consumer Fraud Act. Different provisions of the Consumer Fraud Act open the door for investigations by the attorney general, class action lawsuits, or private civil actions to be brought against a seller that violates the law. If a court or administrative body agrees that the seller is in violation of the law, the results could lead to hefty fines, attorney fees and court costs being assessed against the seller, along with the amounts that the seller collected in violation of the act.
Sellers who wish to avoid the law altogether can elect to absorb the costs themselves or stop accepting credit cards altogether, though this may be difficult in an age when the average customer is carrying less and less cash. Otherwise, sellers who wish to pass along some or all of the credit card fees to the customer should take immediate steps to ensure they strictly comply with the law.
