Illegal Credit Card Fees At 14 NJ Businesses, State Sends Warnings: AG

NEW JERSEY – State authorities sent cease-and-desist warning letters to 14 New Jersey businesses, accusing them of failing to disclose surcharges on purchases made with cards. While card surcharges are legal, merchants must make it clear to customers that they impose them, the New Jersey Office of the Attorney General said Monday.

A combination of service, retail and restaurant operators violated the law, according to the attorney general’s office. The agency didn’t publicly identify the businesses, as it previously did for alleged violations of 2020’s COVID-19 lockdown measures and cannabis laws. Patch asked the attorney general’s office for names of businesses that received warning letters and will update with any response.

Swipe fees can help businesses during trying financial times, which the pandemic and inflation have presented throughout the past few years. Financial institutions commonly assess an interchange charge to merchants for processing credit, debit and pre-paid card transactions. To offset this cost, businesses may add a card surcharge to customers’ purchases.

Under New Jersey’s Consumer Fraud Act, establishments must disclose such fees to customers before or near the point of purchase – not just on the final bill. But several bills within the State Legislature could change the laws around card surcharges.

The Current Law

The New Jersey Consumer Fraud Act prohibits the sale of “any merchandise at retail unless the total selling price of such merchandise is plainly marked by a stamp, tag, label or sign either affixed to the merchandise or located at the point where the merchandise is offered for sale. “

If a business imposes a card surcharge, they must display a notice alerting customers. Each instance of failure to notify customers of a card surcharge – or, charging more for merchandise than the displayed price – subjects violators to a maximum penalty of $ 10,000 for the first violation and $ 20,000 for each subsequent violation.

Average credit card processing fees range from 1.5 to 3.5 percent, according to NerdWallet.

Additionally, gas stations can place holds on credit and debit cards that are well above the purchase price. Visa and Mastercard recently raised the maximum holds that gas stations can place on their cards from $ 125 to $ 175 per transaction. Read more: Gas Stations Can Charge $ 175 Hold On Cards, With NJ Prices Still High

Gas stations can choose how much they’ll hold as long as it’s within the allowable limits. Stations often place holds on card purchases, because the businesses don’t typically know how much a purchase will cost until the gas is pumped.

The hold typically lasts just hours but can last days in some cases, according to Kelley Blue Book. Debit-card users with low funds carry a risk of overdraft penalties during holds, while the hold prices can temporarily eat into credit limits.

What Could Change In NJ?

There are several bills within the State Legislature that would change the laws around card surcharges, holding fees and the consumer protections around them. But the bills remain in the hands of different legislative committees for several months, which has prevented them from receiving full votes from the State Senate or Assembly.

One bill within the Assembly would regulate credit card surcharges. According to the bill’s language, there’s little competition regarding card-interchange-fee pricing, since credit giants Visa and Mastercard set the prices with member banks and smaller merchants with no negotiation power to change them.

As a result, the costs of card surcharges get “unfairly” passed to customers, even those not using credit cards, according to the bipartisan bill.

A different bill would prohibit retail establishments from imposing surcharges on credit card purchases. The legislation wouldn’t apply to gas stations selling fuel at different prices for cash and credit purchases.

Assembly Member Gary S. Schaer (D-36) introduced the bill Jan. 11 and remains its only sponsor. Schaer has introduced similar measures in past legislative sessions – even finding 13 other lawmakers to sponsor such legislation in 2013. But the bill never made it to a full vote in the State Senate or Assembly, and it hasn’t since.

What Can Consumers Do?

Here’s how to avoid unexpected fees, according to the attorney general’s office:

Leave a Comment

Your email address will not be published. Required fields are marked *