In a new wrinkle to the proposed antitrust settlement on credit card interchange, plaintiffs in New York are challenging New York’s anti-surcharge law as a restriction on free speech.
From Consumer Affairs:
“The state is seeking to enforce the credit-card industry’s preferred speech code,” says Deepak Gupta, a Washington lawyer serving as lead counsel for the plaintiffs. “Merchants should be able to use whatever words are most effective to inform their customers about the high cost of using credit cards.”
At the heart of the argument are legal requirements of how differential card versus cash prices are described by merchants to consumers:
Merchants are allowed to charge different prices to consumers who pay with credit versus cash. But under laws in effect in New York and nine other states, the price difference must be described as a “discount” for cash, not a “surcharge” for credit — even though they are mathematically identical. In New York, a merchant who uses the wrong word could face criminal prosecution.
Under the proposed antitrust settlement, merchants gain the right to surcharge for card payments. However, in a number of states, state surcharging prohibitions would take precedence.
Click here to read more from Consumer Affairs.