NY Merchants Challenge State's Credit Card Surcharge Ban Posted by AVCU on 12:09 PM

In September of 2015, the 2nd U.S. Circuit Court of Appeals upheld a New York State ban on merchant surcharges on credit card purchases. Merchants in the state appealed that decision to the United States Supreme Court, claiming the ban violates their right to free speech. New York is one of 10 states that limit how merchants can describe the lower prices they charge for cash transactions.  Such states put bans into effect following expiration of a similar federal surcharge ban in 1984.

On Thursday of this week the Supreme Court agreed to hear the merchants' claim against the state legislature's right to impose the ban on credit card surcharge practices.

New York Credit Union Association President Bill Mellin said . . .

“The decision by the Supreme Court to hear this case will provide nationwide clarity about the ability of legislatures to ensure consumers are treated fairly, regardless of which payment method they use. We know from experience that when merchants are allowed to charge credit card surcharges, the result is more expensive products for everyone, not cheaper products for cash users. The Second Circuit correctly ruled that reasonable restrictions on merchant pricing don’t involve the First Amendment. We look forward to helping demonstrate why this ruling is not only consistent with the Constitution, but also why it benefits consumers and credit card issuers alike."

At the heart of the Supreme Court's hearing of the merchant case is whether no-surcharge laws regulate speech or instead target conduct. While speech regulations must meet a demanding legal test, states are required to show only a rational reason for rules governing commercial conduct.

For full details read the story on Bloomberg Politics.