U.S. top court grapples with validity of credit card surcharge law

1 Lawyer

#1 Lawyer Network

1 Legal - 1 Lawyers - 1 Attorneys

Injury Lawyer - Criminal - Foreclosure - Divorce

 

By Lawrence Hurley | WASHINGTON

WASHINGTON The U.S. Supreme Court on Tuesday
struggled over how to decide a challenge to a state law barring
retailers from charging more to buy with credit instead of cash,
debating whether it merely regulates prices or violates
merchants’ constitutional rights.

The eight justices heard an hour of arguments in an appeal
brought by merchants to a lower court’s ruling upholding the New
York law, which is similar to statutes in nine other states.

Merchants contend these laws infringe on their free speech
rights guaranteed by the U.S. Constitution by dictating how they
describe their pricing to customers.

Retailers are forced to pay fees to credit card companies
every time a customer buys with a card. The law bars retailers
from imposing a surcharge on customers who make purchases with a
credit card. It also makes it impossible for merchants to call
fees paid to credit card companies a surcharge that is added to
the price of a product. The law does not stop retailers from
offering a discount for cash purchases.

The justices debated whether the law even regulates speech
or whether it is a traditional form of price regulation that is
not subject to a free speech challenge.

Several justices including Stephen Breyer indicated they did
not think the law affects free speech, suggesting they may vote
to uphold it. Breyer said the law simply requires retailers to
post a price that includes the credit card surcharge.

“What’s that got to do with speech?” Breyer asked.

Other justices appeared to have concerns that the law could
burden free speech. The state is “forcing the merchant to speak
in a particular way,” Justice Samuel Alito said.

Likewise, Justice Anthony Kennedy noted that a retailer
could be subject to criminal penalties simply for displaying “truthful information.”

An option raised by Alito is for the justices to send the
case to the New York state courts to clarify what the law means
under state law rather than decide it in federal courts.

Retailers have long complained about the cost of accepting
credit cards including “swipe fees,” a percentage of a credit
card transaction the merchants pay to networks such as
MasterCard Inc and Visa Inc every time a credit card
is swiped to pay for a purchase.

“Swipe fees” average about 2 percent of a purchase,
according to the National Retail Federation.

The surcharges that merchants impose can pass the cost of
the “swipe fees” on to consumers and are worth billions of
dollars a year to credit card companies

The New York law subjects merchants to a potential one-year
prison sentence and $500 fine for imposing credit card
surcharges.

Five merchants, including a Brooklyn ice cream parlor and a
hair salon near Binghamton, challenged the law.

In 2013, U.S. District Judge Jed Rakoff sided with the
merchants and blocked enforcement of the law. The New York-based
2nd U.S. Circuit Court of Appeals then upheld the law in 2015.



1 Lawyers
1 Lawyers

1 Legal

#1 Lawyers Search Engine

1 Legal is part of the 1 Search Project

Practice Areas - News - Federal - State - Contact Us


1 Lawyer

#1 Lawyer Network

1 Legal - 1 Lawyers - 1 Attorneys

Injury Lawyer - Criminal - Foreclosure - Divorce

 

Leave a Reply