Sometimes when you look at a receipt, you may see a line item labeled “processing fee” or “convenience fee”. These items are considered surcharges, which businesses may implement to offset the cost of payment processing expenses associated with credit cards transactions.
What is a credit card surcharge?
While many consumers assume that credit card companies bear the cost of these fees, it is actually the merchants who typically shoulder them. As a result, merchants will sometimes try to pass these costs on to customers through surcharges. Specifically, a surcharge is when a consumer is charged an additional fee for using a certain payment method over another, typically this looks like a business charging a fee for using a credit card rather than cash. While surcharges are common across the country, the rules governing their use can vary greatly from state to state.
Are credit card surcharges permitted in Connecticut?
In Connecticut, adding a surcharge for using a credit card is not permitted. Determining what is or is not a surcharge, though, can be difficult. First, surcharges can appear under many different labels, although common ones are “transaction fee” or “processing fee”. While “convenience fee” is another common line item, these are not necessarily always considered surcharges.
Second, businesses can offer a cash discount. For example, a business can post a sign stating “all customers will receive a 5% discount if they pay with cash”. Businesses can also provide dual pricing by explicitly listing a cash price and a credit card price, like many gas stations do.
Are there any exceptions to Connecticut’s surcharge law?
An important exception to the surcharge law is that municipalities, government agencies, and courts are allowed to add additional fees for using a particular payment.
How do I know if I’ve been charged a credit card surcharge?
To check if a business has applied a surcharge to your transaction, you can simply check your receipt. Surcharges must be applied at the time of the transaction, meaning that businesses cannot charge a surcharge after the fact. The surcharge is also not allowed to be added to any taxes or other required fees. It must be clearly stated as a separate charge, ensuring transparency in the total cost of the transaction.
Why does Connecticut regulate credit card surcharges?
The purpose of regulating and prohibiting surcharges is to provide truth/transparency against consumer fraud. In Connecticut, it is considered an unfair trade practice to apply a credit card surcharge, and they are ripe for class actions.
What should I do if I think I’ve unfairly paid a credit card surcharge?
If you believe a surcharge was applied to your transaction, you have the right to file a complaint with the Connecticut Department of Consumer Protection. Consumers can also dispute unauthorized surcharges directly with their credit card companies if they believe they were incorrectly charged.
The law surrounding surcharges can be tricky. If you think you have been improperly charged a surcharge, reach out to Forrest McPadden today.
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Complying with the CTA’s BOI reporting requirements is crucial to avoid potential penalties. The above information is subject to change and may not be an exhaustive list of all requirements or exemptions. Contact Forrest McPadden at (860) 757-3828 or fill out the contact form below to discuss your BOI reporting obligations.