Prohibits the imposition of a surcharge by a seller in a sales transaction on a holder who uses a debit card

5 Co-sponsors

• Brian X. Foley
• Liz Krueger
• Velmanette Montgomery
• José Peralta
• Shirley L. Huntley

BILL NUMBER:S7267C

Title of bill

An act to amend the general business law, in relation to prohibiting the imposition of a surcharge by a seller in a sales transaction on a holder who uses a debit card

Purpose

This legislation would prohibit merchants from imposing surcharges on consumers who elect to pay with a debit card and would clarify that merchants may offer discounts to induce consumers to make payments with means other than credit cards.

Summary of provisions

This legislation would create six subdivisions in section 518 of the general business law, allowing merchants to offer discounts to induce customers to make payments with means other than debit or credit cards. Further, any franchisor or electronic payment system that collects a fee for payments using debit cards shall reimburse all affected merchants for the fees and fines collected and may be liable for a civil penalty of twice the fee or fine levied.

Justification

One of the core tenets of the consumer experience is that the stated price of an item as advertised is the actual price paid at checkout. This fundamental consumer protection has been recognized by governing bodies around the world, and is a core element in New York's deceptive acts and practices statute. It is inexcusable to allow retailers to use the lure of lower advertised prices to entice customers and then to charge them more.

Retailers are currently prohibited from imposing surcharges on consumers who use credit cards. This prohibition must be updated and extended to debit cards. Electronic payment allows consumers to conveniently, securely and responsibly manage their finances. Surcharges and checkout fees hurt consumers and must be outlawed.

Retailers enjoy the same benefits from debit card use as they do from credit card use. For example, lines move faster because customers don't have to pullout their checkbook or fumble for cash. In addition, customers spend more, and the payments are immediately guaranteed. Bad check losses are eliminated.

Allowing retailers to surcharge would force customers to pay for the benefits that merchants receive, shifting 100 percent of the cost of electronic payments to consumers. In fact, surcharging could essentially become an unearned profit center for retailers. The benefits and savings that cards offer will be undermined if retailers are allowed to surcharge and drive consumers to use cash and checks.

Legislative history

This is a new bill.

Fiscal implications

None.

Effective date

One hundred twentieth day after it shall have become a law.