Effective February 11, 2024, NYS General Law Section 518 lets New York businesses charge a credit card surcharge, BUT only as long as the price, including the surcharge, is posted upfront and doesn’t exceed the fees they pay to credit card companies.

Here’s the major points of the new law:

  • No Surcharges: Businesses cannot add a fee on top of the advertised price when you pay with a credit card without also disclosing the total price to be charged.
  • Transparent Pricing: Businesses must charge the same price for both cash and credit card purchases, or list two separate prices with the credit card price including any processing fees being imposed, not by percentage but the actual dollar amount.
  • Discounts Allowed: Businesses can still offer discounts for customers who pay with cash or other methods if the advertised price remains the same for credit card users.

The fundamentals of the law and how it has changed:

  • Previously, businesses could charge a credit card fee, but could only do so by charging the price shown and offering “cash discounts”. The cash discount had to be clearly shown.
  • The new law alters how credit card fees can be applied. Business owners must inform consumers that there are two prices, one for cash and one for credit cards.  The amount must clearly show the difference in price, not percentage.  The consumer then has the option to pay by cash or with credit card at the different price points.
  • The additional fee for use of credit cards cannot exceed the fee charged by the business owner’s credit card processor.
  • Most importantly, the new law creates a private right of recourse, with a possible penalty of $500 per violation. This could lead to class action lawsuits with 5 and even 6 figure exposure.  Municipalities also have a right to recourse, so resourceful towns and villages may seek to create revenue for violations.

Unfortunately, businesses need to beware of aggressive lawyers who will seek to take advantage of this new law and assert claims against business owners that fail to comply.

Let the attorneys at Schwartz Ettenger help you comply and navigate this new law:

  • Reviewing Policies and Procedures: Schwartz Ettenger can review your existing policies and procedures regarding payment methods to ensure they align with the law’s requirements.
  • Training Employees: Our attorneys can provide training to your employees on the law’s key points and ensure they understand how to handle customer inquiries or situations related to credit card payments. This training can help prevent accidental violations and promote consistent understanding within your business.
  • Developing Two-Tier Pricing Systems: While NY GBL 518 prohibits surcharges, it allows businesses to offer a two-tier pricing system. This means displaying two separate prices: one for cash/check/debit and another for credit cards, which can reflect the processing fees the business incurs.
  • Dispute Resolution and Representation: If your business faces any complaints or investigations related to potential violations of Section 518, our attorneys can represent you and advocate for your interests. They can also help navigate any dispute resolution processes or legal actions.
  • Staying Updated on Laws and Regulations: Laws and regulations can change over time. We can help keep you informed about any updates or changes to NY GBL 518 or related consumer protection laws, ensuring your business remains compliant.