Let me start by listing the states that prohibit credit card surcharges (information in this post as written on http://fso.cpasitesolutions.com/Premium/LE/06_le_ic/fg/fg-Merchants.html):
California
Colorado
Connecticut
Florida
Kansas
Maine
Massachusetts
New york
Oklahoma
PERSONAL INFORMATION
Merchants may ask you to provide a phone number, home address, or other personal information on credit card sales slips. This practice not only violates your privacy, but American Express, MasterCard, and Visa prohibit requiring it as a condition of sale.
There is no need for merchants to obtain phone numbers or other personal information from customers. Once they have correctly processed the bank card transaction (gotten an authorization number and made sure the signatures match), they are guaranteed to receive payment.
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MORE: Many states now prohibit this practice; see States That Prohibit Recording Of Personal Information. |
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TIP: If you don’t want to provide personal information on a credit card sales slip, you can refuse to do so. The merchant has no right to refuse you the sale (although unknowledgeable clerks may have no authority to vary from store policy). |
Further, if you refuse to present identification, such as a driver’s license, the merchant may not refuse to make a credit card sale under Visa, MasterCard, and Amex rules.
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TIP: If you exceed your credit limit, the card-issuing bank absorbs the loss, so there is no need for the merchant to contact you. Thus, there’s no reason to provide your personal information. |
MINIMUM CHARGE REQUIREMENTS
Some stores require consumers to spend at least $20 (or some other minimum) to pay for purchases by credit card. They engage in this practice because they and their banks do not want the expense of processing a credit card transaction involving a small amount of money.
This practice defeats one of the major purposes of credit cards—convenience—and may force credit card users to spend more than they want to. In addition, minimum charge requirements vary from merchant to merchant, and there are no regulations requiring disclosure of these minimum purchase levels.
Visa’s and MasterCard’s regulations prohibit minimum charge amounts. American Express’s regulations do not explicitly prohibit minimum charges, but its policy is to discourage any merchant practices that create a “barrier to acceptance.” Amex does prohibit “discrimination” against the Amex card, however, so if a merchant has no minimum charge for Visa and MasterCard, the merchant may not discriminate against Amex by imposing a minimum charge.
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TIP: If a store requires a minimum purchase for Visa or MasterCard, point out to the store manager that the practice is prohibited by the card companies. |
EXTRA CHARGE FOR USING A CREDIT CARD
Some merchants seek to impose a service fee for all credit card purchases.
When a merchant gives a credit card slip to the credit card company or bank for processing, a percentage of each purchase—usually 1.5% to 5% of the purchase amount—is deducted. This “merchant discount fee” helps pay for the bank’s services and for the credit card system. By charging extra for credit card use, the merchant passes the discount fee on to customers.
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MORE: Since 1984, when a Truth in Lending law ban on surcharges expired, some states have enacted laws prohibiting surcharges; see States That Prohibit Credit Card Surcharges. |
Visa and MasterCard prohibit surcharges, and American Express discourages them. Amex does prohibit “discrimination” against the Amex card, however, so if a merchant accepts Visa and MasterCard (and cannot impose a surcharge under those companies’ rules), the merchant may not discriminate against Amex by imposing a surcharge.
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TIP: Any merchant that accepts American Express cards and also accepts Visa and/or MasterCard may not charge consumers a surcharge on Amex purchases. |
Surcharges invite numerous abuses by retailers, including bait-and-switch tactics. There are no laws on how and when surcharges must be disclosed, making it difficult to figure out the total price of an item. Travelers often find it difficult to get out-of-state checks accepted, and should not be penalized for using credit cards. Further, credit card acceptance usually produces higher sales for merchants, offsetting the cost of processing credit card transactions.
Note that a cash discount is legal and permitted under all credit card companies rules. A cash discount offers a lower price for cash than credit; for example, many gasoline stations offer cash discounts. While this may merely be a loophole, it is permitted. In addition, there are a few state governmental agencies, including state tax offices and motor vehicle departments, that are permitted to charge surcharges due to state laws that do not permit them to pay discount fees. However, retail merchants may not impose surcharges.
