Magazine article American Banker

Appeals Court Upholds N.Y. Ban on Credit Card Surcharges

Magazine article American Banker

Appeals Court Upholds N.Y. Ban on Credit Card Surcharges

Article excerpt

Byline: Kevin Wack

A federal appeals court has dealt the retail sector a setback in the ongoing fight over surcharges on credit card purchases.

The 2nd U.S. Circuit Court of Appeals ruled recently that a New York law banning those surcharges does not violate the U.S. Constitution. The decision overturns an earlier ruling by U.S. District Judge Jed Rakoff, who found in favor of a group of merchants who want the right to impose the markups.

The New York case is similar to suits brought by merchants in California, Texas and Florida. In all four cases, the plaintiffs have argued that the state surcharge bans violate the First Amendment.

The plaintiffs' reasoning is that the state laws allow merchants to provide discounts to customers who pay in cash, and those offers are economically equivalent to surcharging credit card purchases. So the states are impermissibly regulating the language that the retailers use to describe their pricing schemes, according to the argument.

The appeals court in New York rejected that argument, as district courts have in Texas and Florida. …

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