Under a new law that took effect on February 11, 2024, all “sellers” in New York who apply a credit card surcharge to sales transactions must now comply with certain consumer disclosure requirements.
Signed into law by Gov. Kathy Hochul in December 2023, the Credit Card Surcharge Law applies regardless of whether the surcharge is a percentage fee or a fixed amount.
The law defines “sellers” as “any person who honors credit cards or debit cards which may be used to purchase or lease property or services.” This broad definition means the law applies to any individual or business engaged in the selling of goods or services, including retailers, restaurants, hotels, spas and salons, medical providers, and others.
The Credit Card Surcharge Law impacts sellers in three key ways:
- Requires that sellers clearly and conspicuously post the total price for using a credit card in a transaction, including the surcharge.
- Prohibits sellers from charging a final price (including the credit card surcharge) that is greater than the posted price.
- Prohibits sellers from imposing a surcharge on a consumer using a credit card that is greater than the amount charged by the credit card company to the seller for such card use.
Failure to comply with these new requirements could result in a significant civil penalty. The law provides that each violation (meaning each transaction that occurs that is non-compliant with any aspect of this law) will result in a civil penalty of up to $500.
New Guidance
Recently, the Division of Consumer Protection from the New York Department of State published guidance to assist sellers in preparing to comply with the Credit Card Surcharge Law. The guidance clarifies that businesses can comply by:
- listing both the total credit card and total cash prices (as one often sees at gas stations);
- listing the total credit card price and notifying consumers that there is a discount for paying with cash; or
- charging the same regardless of whether the consumer uses cash or card.
Notably, this guidance provides examples of practices and postings that would not comply with the legal requirements, including:
- Posting a sign notifying consumers that there will be an additional fee for using a credit card (e.g., “Credit Card Processing Fees Apply” or “Additional service fee for customers paying by credit card”).
- Posting a sign that notifies consumers that there will be a surcharge of a certain percentage applied when using a credit card (e.g., “Additional 3.9% surcharge for credit cards”).
- Maintaining a practice of having a built-in discount for using cash, and posting a sign that any credit/debit card purchases will not receive the cash discount and the price adjustment for using a card will be detailed on the receipt.
- Having a fee that is charged to credit card users only and that is separately delineated on the receipt, regardless of how the fee is labeled (e.g., surcharge, convenience fee, service fee, administrative fee, processing fee, or non-cash adjustment).
- Posting a pricing sign or having a price tag that shows the amount and percent surcharge if purchasing with a credit card (e.g., “$10.00 + 4% if paying with credit card”).
The Division of Consumer Protection has also published infographics depicting the various compliant and non-compliant postings, which can be viewed here and here.
Take Action Now
The Credit Card Surcharge Law took effect on Sunday, February 11, 2024. All New York businesses and individual sellers that have a credit card surcharge or cash discount should take action immediately to ensure they are in compliance with these new requirements.
Specifically, they should review all signage to ensure that compliance with the requirements and put out new postings and price tags, if necessary. They should also review any surcharge that is being applied to ensure that the amount is not greater than what the credit card company charges.
Some sellers may need to consider ceasing their credit card surcharge or cash discount practices (i.e., charge the same amount to cash and credit card users) until they can make the necessary adjustments to comply with the Disclosure Law.
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