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Law Prohibiting Credit Card Surcharge is Upheld in Court

NEW YORK, September 29 – New York’s Second Circuit Court of Appeals upheld a New York law prohibiting the imposition of surcharges on purchases made on credit cards.

In a unanimous 3-0 vote, the federal appeals court issued a 57 page decision overturning the 2013 judgement passed by U.S. District Judge Jed Rakoff in the lower courts, which found the ban of the imposition of credit card surcharges unconstitutional.

According to Section 518 in New York’s General Business Law (NYGBL), the law states “No seller in any sales transaction may impose a surcharge on a holder who elects to use a credit card in lieu of payment by cash, check, or similar means.” In addition, the law also states that New York merchants who are found in violation of this law may be subject to a $500 fine and may face up to one year in prison.

For consumers in New York, this ruling will help ensure that they are not charged additional fees for electing to pay using a credit card rather than a check, cash, or other payment method.

Although the controversial ruling on imposing credit card surcharges, also widely referred to as “swipe fees” is considered a victory for retailers and the protection of their First Amendment rights. It is met with mixed emotions regarding the protection of First Amendment rights of merchants and their rights to enforce business practices in a free enterprise.