A number of states are currently considering new laws designed to prohibit companies from imposing a surcharge on consumers who elect to pay for their goods or services by credit card.
Visa and MasterCard, the nation's largest credit card companies, had long prohibited merchants from charging customers for the cost of processing their credit card transactions. A recent antitrust settlement, however, has forced the credit card companies to change their rules. The lawsuit was filed in 2005 as a class action on behalf of approximately seven million merchants who claimed that Visa and MasterCard had colluded to keep their fees high (Index No. 1:05-md-01720-JG-JO). In late 2012, Judge John Gleeson of the Eastern District of New York granted preliminary approval to a settlement valued at over $7 billion. Among the settlement terms, was a requirement that Visa and MasterCard change their rules to permit merchants to bill their customers for the cost of their credit card transactions.
Effective January 27, 2013, credit card surcharges are now permissible unless otherwise prohibited by state law. While many states (including New York and California) already ban such surcharges, most do not. Several states have recently introduced legislations that would ban or regulate such practices.
Michigan is one such example. Michigan Senate Bill 240 (and its parallel, House Bill 4255) proposes adding a new section to Michigan's Consumer Protection Act. The bill would make it an unfair trade practice to "impose[ ] a surcharge on a consumer who elects to pay for goods or services by credit card rather than in cash, by check, by debit card, or by similar means." The bill defines the word "surcharge" as "any additional amount imposed at the time of a sale of goods or services that increases the charge to the consumer for the privilege of using a credit card to make payment."
Washington is considering a different approach. In its latest iteration, Washington House Bill 1870 would require any retailer imposing a credit card surcharge to "clearly and conspicuously disclose the surcharge." If the transaction is taking place at a physical location, this means that the disclosure must be "conspicuously and continuously posted at the location" and that it must be "in a size and location that is easily seen and read by a consumer prior to a sale." If, however, the transaction takes place online or telephonically, the disclosure must be provided "prior to the point where a consumer is going to approve any final transaction."