Credit Card Surcharges
The Westchester Consumer Protection Department is working to clear up questions for consumers and businesses regarding credit card surcharges. More people than ever before are using credit and debit cards for payments in stores and restaurants instead of cash, and some merchants are now seeking to add surcharges to bills to recover their transaction fees for these plastic payments.
The NYS Court of Appeals recently clarified NYS GBL 518 as follows:
- Merchants can charge two different prices for purchases - by credit card and by cash;
- The higher price charged to credit card users must be tagged and posted for consumers in actual “dollars and cents” form; and
- Merchants can call the price differential a surcharge.
NYS law is now clear - if merchants decide to add a credit card surcharge to purchases, they should clearly inform consumers by posting the actual price with the surcharge and cannot do so in a misleading way. Consumers should not have to do math to figure out whether they are paying the surcharge.
To ensure that New York State Law complies with this court decision, the New York State Legislature recently updated General Business Law Section 518, and the new law was signed by the Governor in December 2023. Our office was involved in the drafting of this updated law after bringing this issue to the State Assemblywoman who sponsored this legislation.
The Westchester Consumer Protection Department is enforcing the law as follows:
- An extra fee for credit card purchases is allowed but it must be clearly set forth in the posted or tagged selling prices for goods or services, not only on the bill at end of the transaction.
- Merchants must either display both prices (cash and credit) or the higher credit card price only, and if a merchant fails to do this it is a violation of law.
- If the merchant only displays the cash price and says the credit card price is a certain percent higher, it is a violation.
Merchants cannot lure in consumers by only posting the lower cash discount price.
Consumers should be fully notified of the full price from the start of the transaction and businesses should post clear and conspicuous signage to notify and assist consumers.
Two sections of the Westchester Consumer Protection Code cover surcharges:
- Section 863.71(3c) makes it a violation for the marking of item prices and advertised prices “To sell or offer for sale any consumer goods or services at a greater price than the price displayed or advertised therefor.”
- Section 863.71(3e) makes it a violation to: “To add an additional fee to any transaction for consumer goods or services, beyond sales tax, and fail to provide adequate and reasonable notice of said fee during the transaction, including but not limited to the point of sale, price displays, signage and menus, and further, only adding said fee to bill or receipt at end of the transaction shall not be deemed adequate notice.”
Lastly, gasoline stations that offer two tier pricing (cash and credit) need to display the higher selling credit price as well as the discounted cash price. Drivers must know when pulling up to the pump what their highest cost exposure is before filling their tanks. Debit sales can be considered credit sales or cash sales, the determination being made by the merchant.
If consumers or businesses have questions about credit card or other surcharges, contact the Consumer Protection Department at