Gavin Howe
In the United States, credit card surcharges are legal in most states, with some exceptions. For instance, in Massachusetts, credit card surcharges are illegal, but some businesses charge them. In other states, like Illinois, surcharging is permitted, but merchants must inform customers of any surcharges being imposed on credit card transactions. In Minnesota, credit card surcharging is legal if the fee can be reasonably avoided by the customer, and the seller must inform the purchaser of the surcharge.
| Characteristics | Values |
|---|---|
| Credit card surcharges | Illegal |
| Businesses charging credit card surcharges | Some businesses do |
| Responsibility to enforce the law | Massachusetts Attorney General Maura Healey |
| Action to take if a customer believes they were illegally overcharged | File a complaint |
| Businesses' perspective | Not in the business of taking money and cash, not set up to do it |
| Merchants' perspective | Surcharges help businesses offset the credit card processing fees charged by credit card payment processors |
| Protocols for businesses that add surcharges | Required to ensure that consumers are aware of the charges before they pay |
| Protocols for businesses that add surcharges | Display a notice of the surcharge at the point of sale, both in-store and online |
| Protocols for businesses that add surcharges | Include the surcharge on the consumer's receipt |
| Protocols for businesses that add surcharges | Decide to add the surcharge at the brand or product level, but not both |
| Protocols for businesses that add surcharges | A brand-level surcharge adds the same fee to all credit card transactions from the same payment network |
| Protocols for businesses that add surcharges | A product-level surcharge applies to a particular type of card from the same payment network |
| Protocols for businesses that add surcharges | The maximum surcharge is 4% of the credit card transaction |
| Protocols for businesses that add surcharges | Inform the purchaser of the surcharge at the time of the sale |
| Protocols for businesses that add surcharges | Have a sign that's conspicuously posted on the premises |
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What You'll Learn
Credit card surcharges are illegal in Massachusetts
In 2021, a woman named Paulette Nickerson took her car to a service shop at Boch Honda in Norwood and was charged a three percent fee for using her credit card. She was told that this was their policy, and her receipt listed the fee as a "non-cash adjustment". This fee totaled an extra $46.85. Paulette believed that this practice went against the law and consumer advocate Deirdre Cummings agreed, stating that "You can offer a discount to your customers for using cash but you may not increase the cost if using a credit card".
Despite this, the Baker administration has made moves to weaken this consumer protection law. Some experts argue that there is nothing to stop any business from asking for permission to charge a credit card surcharge, which would destroy the law.
It is the job of the Massachusetts Attorney General Maura Healey to enforce this credit card law. However, her office has stated that if someone believes they have been illegally overcharged, they should file a complaint.
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Surcharges are legal unless restricted by state law
Surcharges on credit cards are illegal in Massachusetts. However, some businesses charge them, exposing a potentially expensive loophole in the law.
Massachusetts law states: "No seller in any sales transaction may impose a surcharge on a cardholder who elects to use a credit card in lieu of payment by cash, check, or similar means."
However, there are certain exceptions. For instance, government entities in Massachusetts are legally allowed to impose a surcharge on credit cards for taxes, fines, utilities, regulatory fees, licenses, permits, and similar items.
In other states, the legality of surcharges on credit cards varies. For example, in Minnesota, credit card surcharging is legal if the fee can be reasonably avoided by the customer, such as by paying with cash. In Illinois, surcharging is also legal, but merchants must notify their customers if they impose surcharges on credit card transactions. On the other hand, in Hawaii, merchants are prohibited from assessing credit card surcharges on customers who pay with a credit card instead of cash, check, or other similar methods.
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Businesses must disclose any surcharges at the point of sale
In Massachusetts, credit card surcharges are prohibited. However, some businesses still impose them. While the Massachusetts Attorney General is responsible for enforcing this law, their office maintains that anyone who believes they have been illegally overcharged should file a complaint.
Credit card networks such as Visa and Mastercard have their own guidelines on surcharges, including surcharge limits and notification requirements. For instance, in Texas, surcharges are permitted, but businesses must follow specific requirements to notify customers. In Illinois, merchants must notify their customers of surcharges for credit card transactions across all in-person, online, and telephone transactions.
Businesses must also be mindful of not misleading customers by advertising a lower price than they actually charge or by concealing any differences in prices between payment methods. In Georgia, merchants must disclose the exact amount of the surcharge at the point of sale and on customers' receipts. Failure to do so may violate laws prohibiting deceptive or false advertising.
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Surcharges are limited to 4% of the total transaction
In Massachusetts, credit card surcharges are illegal. However, some businesses continue to impose them. Surcharges are fees added to the cost of goods and services to generate additional revenue or
Surcharges are governed by state law and card brand rules (like those published by Visa and Mastercard), each of which is subject to change. Local governments are authorized to enforce the law and each violation carries a fine of up to $500. While credit card surcharging is illegal in Massachusetts, some businesses have been given permission to impose these fees, such as the Diocese of Worcester for parents paying Catholic school tuition with a credit card.
In other states, credit card surcharging is prohibited in Maine, Connecticut, and Oklahoma. In Colorado, merchants can either surcharge a maximum of 2% or charge the actual cost of credit processing. In Minnesota, credit card surcharging is legal if the fee can be reasonably avoided by the customer and if the seller informs the purchaser of the surcharge. In Maryland, surcharging is legal up to 4%.
To avoid surcharges, consumers can use a debit card or pay in cash.
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The Massachusetts Attorney General enforces credit card law
In Massachusetts, the Attorney General enforces credit card law. The state's law about credit, banking, and interest rates is available on the official government website.
Massachusetts law limits credit card annual interest rates to 18% and late charge penalties to $10 per payment. However, customers of national banks located in other states may pay higher interest rates and late penalties, as those states permit higher rates and penalties.
Massachusetts law also prohibits merchants from imposing a surcharge on customers who pay with a credit card instead of cash, check, or similar means. This is enforced by the Massachusetts Attorney General, Maura Healey. However, some businesses continue to charge these surcharges. If a customer believes they have been illegally overcharged, they can file a consumer complaint with the Attorney General's Office.
Massachusetts law also protects consumers' personal identification information. No business entity that accepts a credit card for a transaction can require a credit card holder to provide personal identification information that is not required by the credit card issuer. This includes the credit card holder's address or telephone number.
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Frequently asked questions
No, credit card surcharges are illegal in Massachusetts. However, some businesses charge them.
If you believe you were illegally overcharged, you should file a complaint. It is the job of Massachusetts Attorney General Maura Healey to enforce this credit card law.
Credit card surcharges are fees that merchants charge customers who use a credit card to pay at checkout. Surcharges are legal in most states unless restricted by state law and are limited to 4% of the total transaction.
