Credit card surcharges are annoying. While these charges are an annoyance to customers, but the cost burden that credit card companies impose can be a real problem for some small businesses. I know I’ve been to my fair share of Mom and Pop shops who list a credit card surcharge on their register or simply do not accept credit cards because of the cost to their business.
Well one New York business is taking the Attorney General to court over the issue of displaying surcharges for credit card use. Currently the State of New York has a no-surcharge law. This law does not prevent a business from offering different prices to people who pay cash vs people who use a credit card, it simply changes how those prices are communicated. Currently a business offers a “discount” to people who pay in cash opposed to credit card rather than issuing a “surcharge” to people using plastic. If this seems like semantics to you that is because it probably is.
Expressions Hair Design v. Schneiderman is a case that will be argued before the Supreme Court in January where Expressions Hair Design and a number of other New York businesses are challenging New York’s no-surcharge law. It will be up to the Court to decide whether this law is in violation of the businesses’ First Amendment right to free speech, communicating prices with the customers in the way they see fit, or if the law is an appropriate regulation within the scope of the state legislatures ability to govern economic activity.
The District Court ruled in favor of Expressions saying that the law limited the commercial speech available to the businesses and was overly vague. Later the Circuit Court of Appeals reversed that decision saying that prices were not inherently protected speech and that the surcharge provision was easily understood.
This court ruling could have interesting impacts on businesses ability to communicate things such as the origin of costs to their customers.