Businesses in New York are hitting consumers with credit card surcharge fees, but few patrons realize that, in many cases, these surcharges are illegal in New York State.
It is not uncommon these days for diners to be hit with a 4% credit card surcharge on their $150 dinner bill.
However, restaurants, as well as other businesses, are not permitted to tack on the additional surcharge from the price listed on the menu or price list. For instance, if the menu notes that a chicken dinner will cost you $30, you cannot be charged $30 plus an additional 4% surcharge when the bill arrives, even though this is commonly happening.
According to a guide issued by the New York State Department of State https://dos.ny.gov/news/consumer-alert-nys-division-consumer-protection-alerts-consumers-ny-law-related-credit-and, it is legal for the restaurant to offer you a cash discount, but that would have to be money taken off the $30 listed price. A restaurant could also properly list the cash price and the credit card price by noting it’s $30 for cash price and $32 for credit card or $30 for credit card and $28 for cash. The consumer alert issued by the department states:
New York State Division of Consumer Protection is reminding consumers that credit card surcharges are prohibited in New York State. Businesses are not allowed to advertise a price and add a surcharge at the point of sale when a consumer elects to pay with a credit card. Instead, businesses are required to inform consumers of the higher credit card price for a product or service by posting the higher price. Businesses are also able to offer a discount to consumers who pay in cash.
It is not enough for the restaurant to place a disclaimer on a sign posted somewhere or even on the menu itself that says the menu price is the cash-only price. Consumer officials have noted that it should not be up to the consumer to have to calculate the difference.
In other words, the consumer should not be paying more than the listed price, other than the sales tax that would be added on.
The state Office of Consumer Affairs provides the following chart to describe what would be proper, and what would not.
The following illustrates common New York consumer transactions:
| Examples | Credit Card
Requirements |
Debit Card
Requirements |
| Percentage Fee: Tabitha goes into Tavern T for a meal. She sees on the menu a sign that says, “If you use a credit or debit card, you will incur a 5% fee.” | Violation | Compliant |
| Additional Charge: Tim heads to a new food truck parked on the corner near his office and orders a delicious lunch. When he goes to use his debit card, the operator tells him there will be an additional $2 added because he is using his debit card. | Violation | Violation |
| Listed Itemized Price Scheme: Jane goes into Shoe Store S. “The first price listed is if you use a credit card or debit card for your purchase. The second price is for cash.” | Compliant | Compliant |
| Flat Fee Notice: Kevin goes into his corner store for some groceries. A sign at the register says, “$5 fee for credit or debit card sales.” | Violation | Compliant |
| Cash Discount: Sophia goes to her florist. A sign at the register says, “$3 discount for all cash purchases.” | Compliant | Compliant |
| Post Purchase Fee: Frank goes into Restaurant R for an enjoyable meal. When he gets the check, he notices a “services fee” that was added when he said he was paying with his credit card or debit card. | Violation | Violation |
| Pay at the Pump: Violet stops to fill her tank up with gas. The per-gallon price is listed – and is the same as the price on the sign she saw when she drove in. There is also a discounted price per gallon listed if Violet chooses to pay with cash inside the store. | Compliant | Compliant |
| Percentage Fee Notice: At the end of Alex’s medical appointment, she sees a sign that says, “3% fee for all credit and debit card transactions.” | Violation | Compliant |
| Discounted Product: John stops at the gas station to fill up. A sign at the pump says, “Free cup of coffee with all cash sales.” | Compliant | Compliant |
| Percentage Discount: A supermarket banner at the door reads “3% discount for all purchases using cash.” | Compliant | Compliant |
Unfortunately, the ambiguity in the minds of both business owners and consumers leads to very awkward situations when the bill is presented. Even though the consumer may be correct, he or she may not wish to make a huge fuss holding up everyone else online over the 4% surcharge. Many will just pay it and walk out of the store in a huff. And, if one does seek to fight it, it could lead to a half-hour debate with the store, the clerks and their manager.
That’s why it’s so important that Consumer Affairs agents hit the streets and let these businesses know what is proper and what is not. Repeat offenders must be hit with fines that will create an adequate deterrent.
Additionally, greater educational outreach must be conducted so that consumers know their rights. As more and more consumers complain, fewer businesses will take advantage of them.
Moreover, it is often not even the fault of the business owner, who might be confused as to what is proper and what is not. Some are under the false belief that, if they just have a sign that says the posted price is the cash-only price, it’s good enough. That will not suffice. That’s why a gas station will properly allow you to see the exact price for using credit or cash. It is not left to the consumers to do math in their heads if the station says it is a 4% surcharge.
For more information on how to file a complaint, visit https://dos.ny.gov/file-consumer-complaint.