KEN KIRSCHENBAUM, ESQ
ALARM - SECURITY INDUSTRY LEGAL EMAIL NEWSLETTER / THE ALARM EXCHANGE
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Is there disclaimer needed to surcharge credit card payments in Florida and Georgia / what states prohibit surcharge
May 20, 2023
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Is there disclaimer needed to surcharge credit card payments in Florida and Georgia
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Ken,
Is there a disclaimer that allows us to charge credit card fees in Florida?
Captain John Minerva, President
Executive Electronics
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Ken
We want to implement a 3% Credit Card Surcharge on monitoring. Based on my research this is allowable but you have to get a 30 day written notice and provide an alternative payment method. Can you confirm using Surcharge or Processing Fee is legal for Georgia. My understanding is that this must be a separate line item on the invoice as well.
This is the language I have for the notice.
“We are implementing a standard form of payment that can be debit card or bank draft July 1st. If you choose to pay by any other means, there will be an additional 3% surcharge.”
Tommy
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Response
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You don’t need contractual authorization, so no disclaimer or consent is required, but you do have to provide notice of the surcharge so that the customer knows that there will be an add-on to the charge for services. This by the way can be different in other states though the constitutional considerations would be the same. Your credit processor will likely alert you if you are adding a surcharge as to requirement. Keep in mind that the credit card processor may have more stringent requirements than the law requires.
I thought this warranted a more formal response, so here is a response from one of the attorneys at K&K
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Florida Statutes 501.0117 had previously prohibited any “surcharge” if a customer was paying by credit card. However, in Dana’s Railroad Supply v. Attorney General, State of Florida (807 F.3d 1235 (11th Cir. 2015)), the 11th Circuit declared the statute unconstitutional for violating the first amendment (the court held that since the statute only bans “surcharges” but not “discounts”, the statute’s focus was the actual speech used by merchants and there is no substantial government interest that would allow the ban).
So credit card fees can be charged in Florida. There does not appear to be any specific disclaimer language that is required by statute, but the Florida Attorney General’s Office offers this guideline:
“Credit card surcharges must be disclosed before purchase. Most credit card companies require merchants to disclose credit card surcharges in online transactions, on a sign at the store’s point of entry and point of sale, and on the receipt. Additionally, any undisclosed fees may constitute an unfair or deceptive trade practice prohibited by Florida law.”
A clear and conspicuous notice that there is a credit card fee being charged and the amount of that fee, as long as it is made to the consumer prior to the purchase, should be sufficient.
Daniel Shafer,Esq
Kirschenbaum & Kirschenbaum PC
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Additional requirements are:
Disclosure: Businesses must disclose the surcharge amount to the customer before the transaction takes place. The disclosure must be made in a clear and conspicuous manner, either in writing or by posting a notice at the point of sale.
Reasonable surcharge: The surcharge amount must not exceed the actual cost of accepting credit card payments, which includes processing fees, equipment costs, and other related expenses. Businesses must keep records of their costs to demonstrate that the surcharge amount is reasonable.
Consistency: The business must apply the surcharge consistently to all credit card transactions. They cannot selectively apply the surcharge to certain customers or transactions.
Payment network rules: If the business accepts credit cards from payment networks, they must comply with the network's rules regarding surcharging. For example, Visa and Mastercard require businesses to disclose the surcharge amount on the receipt and comply with other rules related to surcharging.
Compliance with state law: Florida law prohibits businesses from charging a surcharge on debit card transactions or any transaction that uses a prepaid card. The surcharge can only be applied to credit card transactions.
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In Georgia the requirements are similar:
In Georgia, USA, businesses are allowed to charge customers a surcharge for paying by credit card, but they must comply with certain requirements. These requirements are based on the state law and the regulations of the payment card networks such as Visa, Mastercard, and American Express.
Here are the requirements for businesses in Georgia to charge customers a surcharge for credit card payments:
Disclosure: Businesses must disclose the surcharge amount to the customer before the transaction takes place. This disclosure can be made either in writing or by posting a notice at the point of sale.
Reasonable surcharge: The surcharge amount must not exceed 3% of the total transaction amount. This surcharge can only be applied to credit card transactions and not to debit card or cash transactions.
Consistency: The business must apply the surcharge consistently to all credit card transactions. They cannot selectively apply the surcharge to certain customers or transactions.
Payment network rules: If the business accepts credit cards from payment networks, they must comply with the network's rules regarding surcharging. For example, Visa and Mastercard require businesses to disclose the surcharge amount on the receipt and comply with other rules related to surcharging.
Compliance with state law: Georgia law prohibits businesses from charging a surcharge on credit card transactions that exceed the cost of acceptance. The business must ensure that the surcharge amount does not exceed their actual cost of accepting credit card payments.
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What states prohibit surcharge
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Credit card surcharges are prohibited in the following states have laws that prohibit merchants from charging a surcharge on credit card transactions:
California
Colorado
Connecticut
Kansas
Maine
Massachusetts
New York
Oklahoma
Texas
In these states, businesses are not allowed to charge customers a surcharge for using a credit card. However, they are still allowed to offer discounts to customers who pay with cash or other forms of payment. It's important for businesses to understand the laws and regulations in their state regarding credit card surcharging to avoid any legal or financial consequences.
In at least one state, New York, [maybe the others as well] you can offer discounts for payment in something other than credit card:
In New York, businesses are not allowed to charge customers a surcharge for using a credit card. However, they are allowed to offer a discount to customers who pay with cash or other forms of payment. This discount may be advertised as a lower price for cash payments, and it can be equal to the amount of the credit card processing fee that the business incurs.
For example, a gas station in New York may advertise a price of $2.50 per gallon for cash payments and $2.53 per gallon for credit card payments. This is technically a cash discount rather than a credit card surcharge.
It's important for businesses to comply with the state's laws regarding credit card transactions to avoid any legal or financial consequences. Violations of the credit card surcharge law can result in fines, penalties, and even legal action by the attorney general.
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Ken Kirschenbaum,Esq
Kirschenbaum & Kirschenbaum PC
Attorneys at Law
200 Garden City Plaza
Garden City, NY 11530
516 747 6700 x 301
ken@kirschenbaumesq.com
www.KirschenbaumEsq.com
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