AG warns: Credit Card Surcharges Possible

LANSING – Attorney General Bill Schuette today issued an alert advising consumers to be mindful of changes to credit card surcharge rules. The new surcharge rules come as a result of a recent court settlement between various merchants and Visa and MasterCard.

“As new credit card surcharge rules take effect, it’s important to ensure consumers are well-informed,” said Schuette. “Retailers are now permitted to charge new fees to MasterCard and Visa cardholders, but they must post notices and follow strict guidelines if they choose to collect the fees.”

As of January 27, 2013, Visa and MasterCard made changes to their rules regarding credit card surcharge fees following a settlement in a class-action lawsuit in United States District Court for the Eastern District of New York that affected whether retailers can charge fees to recoup the cost of processing certain credit cards. The settlement resolved claims that Visa, MasterCard, and their respective member banks violated the law by imposing and enforcing rules that limited merchants from steering their customers to other payment methods.

Doing so insulated them from competitive pressure to reduce credit card processing fees. Schuette notes that while Michigan law does not forbid it, Visa and MasterCard have historically prohibited merchants from imposing a surcharge on credit card purchases.

Although merchants are now permitted to assess a surcharge, they are not required to do so. The surcharge is intended to equal the actual cost of processing the credit card transaction, which is typically 1.5 to 3 percent.

Below is information on the terms of the settlement and how Michigan consumers can be affected:
· The new surcharge is capped at 4% of the purchase price, and it can be no more than the amount the merchant pays to process the credit card.
· Debit or prepaid card purchases are exempt from the surcharge.
· For credit cards issued by Visa or MasterCard, the surcharge can vary based on type of card. For example, the surcharge could be higher for a premier card or a rewards card.
· If a merchant chooses to impose a surcharge, they must provide notice to their customers at the store’s entrance and at the point-of-sale.
· For online sales, merchants must disclose they intend to impose a surcharge on the first website page that references credit cards.
· All merchants are required to disclose the surcharge dollar amount on every receipt.