• Courts Continue to Chip Away at "No Surcharge" Laws
  • March 7, 2018 | Author: Christopher R. Rahl
  • Law Firm: Gordon Feinblatt LLC - Baltimore Office
  • In our April 2017 Maryland Legal Alert, we reported on a case decided by the United States Supreme Court that involved a First Amendment challenge to a New York law that prohibits merchants from charging a surcharge when a customer pays with a credit card rather than cash. In that case, the Supreme Court found that the New York surcharge law regulated commercial speech and the Court remanded the case for the Second Circuit to determine if the law impermissibly regulated commercial speech. On January 3, 2017, the Ninth Circuit Court of Appeals held that a similar California “no surcharge” law impermissibly regulated commercial speech. The decision involved a challenge to a California law that prohibits merchants from charging a surcharge when a customer pays with a credit card rather than cash. The Ninth Circuit relied on the Supreme Court’s recent New York “no surcharge” decision and held that the California law did not regulate how much merchants could charge customers, but rather regulated how merchants communicated pricing to customers. The Ninth Circuit held that the California law regulated commercial speech and, because the commercial speech it regulated was not misleading or connected to any illegal activity and was not narrowly tailored to achieve a legitimate California interest in protecting California consumers (e.g., from deceptive pricing), it found the California law unconstitutional. Including California, there are currently ten states with "no surcharge" laws: Colorado, Connecticut, Florida, Kansas, Maine, Massachusetts, New York, Oklahoma, and Texas. Please contact Christopher Rahl with questions about credit card surcharges, credit card association rules, or similar issues.