US Supreme Court

US Supreme Court

Credit card surcharges came before the US Supreme Court on 10 January in a case that concerns how much freedom retailers have in telling consumers they are being charged extra for the payment method. Comments from justices suggested that the Supreme Court might send the case back to New York for further review, though it was unclear when a decision would be announced, according to news reports and Paybefore.

The case stems from a group of New York merchants who want the right to impose surcharges on purchases made with credit cards. The outcome of the case could have an effect on laws in ten states that restrict such surcharges.

The group of five New York merchants – which includes a Brooklyn ice cream parlor and a hair salon near Binghamton – claimed in its petition to the Supreme Court that banning surcharges is a violation of the First Amendment’s free speech protections. Although all states allow merchants to charge a higher price to customers who pay by credit cards, ten states have laws that govern how those price differences can be communicated. New York law allows merchants to offer a discount for cash payments, but makes it a crime – punishable by up to one year in prison – to impose surcharges on credit card purchases. In defence of those laws, state officials have said that they protect consumers from being charged too much.

Retailers see it differently. “This case isn’t about surcharging,” said Mallory Duncan, the National Retail Federation’s general counsel and senior vice-president. “It’s about giving retailers freedom of speech when they try to give their customers a break for paying by cash. Some states allow cash discounts but prohibit credit card surcharges. A gas station owner shouldn’t be hauled into court for saying gas is $2.90 a gallon cash and $3 credit rather than saying $3 credit and $2.90 cash.”

Some justices seemed unenthused about deciding the case. “The court should stay out of this,” said Justice Stephen Breyer, according to a report in USA Today. Justice Samuel Alito said the case involves regulating prices through the First Amendment, something he said he is reluctant to do, but he did express sympathy for merchants. “That is mandated speech,” he said about the surcharge laws. “They are forcing the merchant to speak in a particular way.”