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New York Law Requires Posting Credit Card Surcharges

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Another new law will soon go into effect in New York that’ll impact your business and its operations. In December 2023, Governor Kathy Hochul signed legislation amending § 518 of the General Business Law that finally allows New York businesses to pass along the cost of credit card processing so long as they clearly and conspicuously post the total price for using a credit card in a transaction. The law aims to protect consumers from any confusion they may face about the price of goods or services.

The law becomes effective on February 11, 2024.

Who’s Affected By The New Law?

Section 518 affects any seller in any sales transaction that imposes a surcharge on a customer who elects to use a credit card in lieu of cash or check. Sellers can be almost anyone: retail like a gas station, restaurant, or clothing store; a provider of services like a healthcare provider, accountant, or coach; and so many more! The law includes any business where you’re selling something to another person and charging them an additional fee for using a credit card or offering a discount for paying in cash.

Based on this broad definition, the vast majority of New York businesses will be subject to this law if their pricing varies when a customer or client uses a credit card.

Any Positives About this Law?

Actually, yes there are!

New York’s outright ban on credit card surcharges – which as a practical matter may or may not have been complied with by businesses – will be eliminated effective February 11, 2024. As a result, sellers in New York will have added flexibility to determine whether to pass along the cost of offering credit card payments to their customers.

What Do You Need to Post?

If you’re imposing a surcharge on customers who use a credit card, you must ensure that:

  1. The total price for an item if paying by credit card is clearly posted. For example, the sticker price of an item must reflect the price plus the applicable surcharge, if any.
  2. Your surcharge isn’t greater than the cost charged to you by the credit card processor.

The law now recognizes that a two-tier pricing system, which allows you to post two different prices, one for cash and a higher price for credit card payment. Merchants are free to continue offering a discount for paying in cash; you just need to have both the credit card and cash prices posted alongside one another.

Are There Penalties for Noncompliance?

Noncompliance with § 518 carries a monetary fine, which is why it’s so important that you be compliant. Violations may result in a fine up to $500 for each violation. To be sure, the government is looking for violators, and the law allows local governments to look for and impose fines on violators.  Indeed, there’s a consumer-focused easy-to-use complaint form sponsored by Erie County online. But beware: if it remains the same as it is today, the content of the Erie County and the New York State Department of State Division of Consumer Protection websites will be out of date effective February 11th. Currently they reflect the law as it exists prior to February 11, 2024.

What Do You Need To Do?

As a New York business owner or manager, if you pass along the cost of credit card processing to customers, ensure your total prices, including surcharges, are displayed clearly and in plain sight at the point of purchase, including on your website if you’re engaged in e-commerce. Also make sure that the surcharges you’re charging your customers don’t exceed the actual cost of the card processing that you pay.

Plan now, because the law becomes effective in a couple weeks, on February 11, 2024, and you want to be ready.

If you have questions about this law or other compliance issues affecting your business, contact us at 716.839.9700 or info@coppolalegal.com. We’re always happy to help.

Lisa Coppola

Written by Lisa Coppola

Founder of The Coppola Firm

Lisa A. Coppola, Esq. understands the challenges her clients face, whether they’re starting a new business, taking their existing operations in a new direction, or facing a claim or threat.

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