Maryland Legal Alert for Financial Services
To Charge or Not to Surcharge, That is the Question
The Governor of New York recently signed NY General Business Law § 518 into law which went into effect on February 11, 2024. This new law amended a previous New York law which prohibited merchants from imposing a surcharge on customers who used a credit card to pay for goods and services. The new law stipulates that if a “seller” is to impose a surcharge on the customer for the use of a credit card, then the “seller” must clearly and conspicuously post the total price for using a credit card, inclusive of the surcharge and such surcharge may not exceed the amount of the surcharge charged to the business by the underlying credit card issuer. In addition, the law imposes a civil penalty not to exceed $500 per violation. Merchants subject to the new law may charge New York customers who pay with a credit card a surcharge, but subject to these new limits. Merchants subject to the new law will be faced with the difficult task of determining how much their respective card issuers will charge them to meet the new law’s fee cap.
Similar to the New York provision, in Maryland, House Bill 1481 cross-filed with Senate Bill 0520 was introduced in February of 2024 with proposed language prohibiting a retail business from charging a consumer a credit card surcharge that is more than the amount charged by the underlying credit card issuer. The future passage of this bill is unclear at this stage but if it does pass, merchants in Maryland will be faced with the same challenge of determining how much their respective card issuers will charge them to meet the applicable provisions’ fee cap.
A handful of other states have existing credit card surcharge limitations, so merchants with multi-state footprints will be forced to continue to apply a state-by-state approach concerning the amount/permissibility of credit card surcharges. For more background on credit card surcharges, please see our Maryland Legal Alert February 2019.
For more information, contact Christopher R. Rahl or Ebele U. Ebonwu.
Contact Christopher R. Rahl | 410-576-4222
Contact Ebele U. Ebonwu | 410-576-4082